I currently have two credit cards, a BA Amex card, no interest free period, used for ‘everyday’ purchases from online retailers (lots now who accept Amex) and for booking flights. Builds up my Avios points which is what I’m interested in. Statement paid off every month, so no interest repayments = no debt. The Amex mobile App is superb by the way!
Second card, Virgin Money 28 month interest free period. Used solely and primarily for funding expensive purchases that I have no wish to dip into my current account for. So the only time I’ve used the card thus far, was to fund a very expensive holiday. I will pay the card off within the 28 months interest free period thereby effectively having had an interest free loan. As it stands, I only have 3 payments left to make on my so far first and only purchase and then I’ll still have 18 months remaining on the interest free period to fund another purchase if I wish. The key point here is, no spending on the card until the current purchase is settled! At the end of the 28 month interest free period, I’ll ditch the card as there will be no point in retaining it. I did this with my last interest free card. In fact, I didn’t even have to take any action to cancel the card myself, I just didn’t use the card for 2 years and the bank cancelled it themselves because they sent me two letters advising that if I didn’t use it within a certain period of time, they would automatically cancel it for fraud prevention purposes. I ignored the letters and the card was cancelled (I know this because it is indicated as such on my credit report as ‘settled’.) This didn’t in any way impact my credit score as I successfully applied for other credit cards after that. Indeed, my credit score is pretty good to be honest.
So my point is, credit cards, i.e. the right credit card, can be a super savvy way to purchase IF you are financially disciplined enough to make more than the minimum repayment at each and every statement. Clearly, there are people out there who probably should never ever be allowed anywhere near a credit card because they are unable to grasp the concept of spending control, the personal responsibility bit. Ultimately, the aim should be to never pay a penny in credit card interest and I have never paid a penny in interest. Sadly though, interest payments a daily fact of life for many credit card holders and ultimately, this is what makes the credit card providers money. Undoubtedly it also allows people like me to keep utilising interest free periods, effectively allowing me to make use of interest free loans for as long as there are credit card providers out there who carry on promoting these types of credit card.
Basically, if you are financially savvy and can exercise enough financial self discipline to pay off whichever card you have sucessfully applied for, then credit cards are excellent for the additional financial protection they provide and of course the interest free period that some use as the ‘hook’ to draw you in. They are also often required for things like car hire, so having one can be a must for someone such as myself who travels frequently.
So in summary, I only ever usually apply for the interest free period cards, the Amex card being the exception because of the Avios points earned on purchases. I would also personally not hold any more than 2 credit cards, I stress that is a personal choice, not a recommendation. I would also consider asking the credit card company to cap the credit card limit for purchases if they start increasing the limit. They shouldn’t acually do this unless they contact you first.