Tips for Using Your Credit Card Responsibly

Whether you’re thinking of getting your first ever credit card or you’ve used one for years, using it responsibly is the fulcrum of long-term financial stability.

Even though spending limits vary according to each account and individual, it’s often tempting to dive straight in and start spending. But maxing out can cause more stress than stability, so here’s how to start building sustainable habits from the get-go.

1. Pay off your balance in full

Don’t fall into the trap of paying only partially or waiting too late to sort your debts. Paying your bill in full every month helps you to avoid steep interest charges and build a healthy credit score.

With inflation still rising in the UK, it’s clear that the cost-of-living crisis is still a pressing issue for many. Everyday life can feel unaffordable, especially for those with young families and lower-paid jobs. Using credit can be a lifeline, but it’s important to keep in control and pay those bills on time.

• Understand the cost of borrowing

While credit cards offer flexibility and increased spending power, they can become a very expensive way to borrow if balances aren’t paid off in time.

The Bank of England sets targets for average Annual Percentage Rate (APR) on credit cards and agreements, but these compete with staggering rates of inflation too. Now more than ever, borrowing needs to be approached cautiously.

You should only take out what you can afford to pay back, and wherever possible, you should keep a ‘safety net’ of savings in your account. Perhaps most importantly, being able to recognise if you need financial support will get you back on track quickly.

• Monitor your spending

Being sensible with your money on a day-to-day basis is important too. You shouldn’t make impulse payments and go shopping on a whim without the means to do so.

Regularly reviewing your credit card statements can help you to stick to your budget and avoid unnecessary debts. According to the FCA’s Financial Lives 2024 survey, at least 13% of UK adults were heavily burdened by their credit commitments and domestic bills. Persistent debt can be difficult to shake, so it’s worth taking preventative measures while you can.

• Utilise consumer protections

Finally, don’t forget that there are resources and protocols designed to protect you as a credit user. It’s important to make good use of these and ensure that all your transactions are transparent and legal.

Under Section 75 of the Consumer Act, credit card purchases between £100 and £30,000 will be protected if something goes wrong. Whether you experience a breach of contract or the goods simply never turn up, your credit card provider will be jointly liable. 

Effectively, buying on credit often means you can have more confidence in the quality and assurance of the goods or services you’ve purchased. With this in mind, it’s worth using credit with purpose and direction.