Credit cards normally get a bad name in the media and even by our friends or parents.

The truth is that they aren’t that bad at all. As long as you know what you are doing, credit cards can be great for you.

What are the benefits of a credit card? The main benefit is that it can improve your credit score if used properly, for example, if you set up a direct debit to pay off the statement balance each month then your credit score will improve as you are clearing off your monthly balance. This shows the credit company that you are capable of paying off debt. An increased credit score can have advantages for your future. Such as, a cheaper cost of borrowing. E.g. cheaper loans, Cheaper mortgages, Higher acceptance likelihood for loans. Credit cards can help with your month to month expenditure, if your pay check doesn’t quite cover your monthly expenditure you can always pay for the last few things with a credit card. However you must make sure you pay off the statement balance the following month so that you don’t incur any interest on your purchases.

What are the disadvantages of a credit card? If you don’t pay the monthly statement balance, your credit score will worsen and you balance will incur an interest charge which could make your next payment extremely expensive. A worse credit score will have an adverse effect on your acceptance for a loan as well as the cost of borrowing.

These are the two main types of credit cards available on the market. Rewards – This is where you receive either reward points (which can be redeemed as vouchers or air miles, etc) or cash-back. Balance Transfer – This is where you can transfer other credit card debts onto a single new one (Hopefully with lower interest)

If you’re looking for a credit card, all you need to do is go on a comparison website. Search for what kind of credit card you are looking for, pick the one with the lowest Interest APR. You’ll then have to fill out a quick application and a credit check.

So, the general rules of using a credit card:

• Set up a direct debit for your credit card so that the balance gets paid each month and you don’t incur interest
• Don’t spend more than 20% of your credit limit per month (Spending more can harm your credit score)
• Don’t get credit cards from a high street bank as the rewards aren’t as good as they are from a provider such as Tesco Bank, American Express and Aqua (especially if you have a low credit score)