What purchases are best to buy on a credit card?

You may associate making credit card purchases with unsecured debt, but there is more to a charge card than meets the eye. Your credit cards APR may be high, but debt interest can be avoided. There are also a number of benefits that come from making general purchases, using 0% APR cards and performing credit transfers.

Regular purchases on cashback and reward cards

If you make a lot of every day purchases, it's worth buying them on a rewards credit card. You'll then have the opportunity to make some extra cash for free. For example, using the American Express Platinum card entitles you to 5% cashback for the first 3 months and up to 1.5% on all future purchases. If you spend £5,000 of regular purchases each year, you can get £75 for free. Under no circumstances should you buy something just to earn rewards. You should also pay-off the full balance at the end of the month to avoid the payment of interest.

Buying goods and services from online merchants

When you make a purchase for more than £100 using your credit card, you benefit from protection against company insolvency under section 75 of the Consumer Credit Act. In the modern day financial climate, this is a very important consideration. This applies to if you bought some expensive jewellery and paid just 15p on your credit card. The credit card issuer is jointly liable with the retailer with respect to the payment of compensation. This sort of protection isn't available if you pay with your debit card.

Purchase protection against loss or theft

Many issuers offer free purchase protection insurance if your possessions are lost or stolen within 90-days of making your purchase. This is very useful if you make online purchases that go missing or are stolen in transit.

Introductory offers and free balance transfer cards

If you've got a new credit card that charges 0% interest, it's cheaper to make your purchase on that card than it is to take out a loan or use store credit. You can then stooze - perform a succession of transfers - to get the equivalent of a free loan. The avoidance of interest will enable you to pay off the balance far more quickly. However, it's inadvisable to use more than 30% of your credit limit in one month as this could have negative implications for your credit rating and will affect your ability to transfer a balance.