Five reasons to have a credit card
As the nation continues to repay unsecured debt, with Brits regularly repaying more than they spend and opting for other forms of payment, Confused.com has come up with five reasons why it's still a good idea to have a credit card to hand.
Five things you need a credit card to do (or which are very tricky to do without one):
1 Rent a car
Whilst there are some rental companies out there which will let you hire a car without a credit card, the majority require one for the booking to be confirmed, as security on their part. Using a credit card to book a hire car can actually work to the consumer's advantage - if the total hire price exceeds £100 it will be covered by section 75 of the Consumer Credit Act, meaning the card provider is equally liable in the event something goes wrong with the hire arrangements. This could prove especially valuable if dealing with an overseas company. In addition, any credit card charges could be negated by using a reward based credit card so you get something back from your spend.
2 Book a hotel room/stay in a hotel room
Although it's possible to pay for a hotel room in cash or using a debit card, a credit card is often required to confirm a reservation and at point of check in as security in case you drink the mini bar dry or break something and don't own up when you leave. As with renting a car, booking on a credit card will provide protection under section 75 of the consumer credit act should something go wrong with the booking, providing the cost of the room exceeds £100.
3 Company expenses
Many companies expect their employees to pay for any expenses when they're out of the office and claim them back on a monthly basis. When entertaining clients or paying for travel this can quickly build up into substantial amounts, making a credit card a good option for paying to ensure that employees don't go short by spending their own cash, paying the bill off once the expenses are repaid. Whilst some people begrudge paying for expenses and claiming them back, eager employees can ensure they get some benefit back by taking out a reward based credit card and keeping the cash-back or rewards for themselves.
4 Buy tickets for big sporting events (often sponsored by Mastercard or Visa) i.e. Olympics 2012
Sponsorship deals for big sporting events like the Olympics now include clauses that say tickets have to be paid for using a specific provider's card. At London 2012 tickets have to be paid for using a VISA card, meaning customers who want to watch this once in a lifetime event will be forced to open a new account, unless they have one already. While this may seem a little unfair, customer's can take advantage of the situation by ensuring a new card they open offers other benefits as well.
5 Build up a credit rating, receive rewards and protect purchases
Having a credit card helps consumers demonstrate to banks that they can handle credit responsibly. Having a credit card, using it occasionally and always paying it off in time could help towards building up some good credit history in readiness for making a mortgage or larger loan application in the future.
Picking a reward based credit card can benefit consumers by earning them cash-back or shopping rewards simply in return for using a particular card, something that can't be achieved using a debit card. However, to get the maximum benefit from a reward card customers need to ensure they pay the balance off in full each month, to avoid interest eroding the value of the rewards earned.
Finally having a credit card will offer protection for purchases under section 75 of the consumer credit act, providing the total purchase price exceeds £100 - something that customer's don't get with a debit card.
For more information, visit confused.com.