There can be several benefits of using a credit card if done responsibly. The biggest advantage of a credit card over a debit card is the former helps to establish creditworthiness. If repayments are made on time and in full it will positively impact the credit score and history. It is more convenient for large purchases and a user can also get plenty of benefits and perks with certain cards.

Let us look at some of the perks that come with using a credit card sensibly:

1. You get credit card purchase protection

The Consumer Credit Act 1974, Section 75, ensures that anyone using a credit card to buy goods or services is covered by purchase protection. If you are unsatisfied or the purchase does not arrive in proper condition, the purchaser in entitled for a chargeback. This is also applicable on airline or hotel bookings in case any of them go bust at the last moment. This is a feature not available on debit cards.

2. Building your credit score

Making timely monthly repayments on purchases you make with your credit card allows you to strengthen your credit score. From applying for car finance to taking out a mortgage, a healthy credit score will give you access to more credit offers at the best rates.

3. Interest-free purchases

Most leading credit card providers offer interest-free periods to pay back what you spend. This allows you to make purchases without worrying that you will incur interest fees. In comparison, most overdrafts – another popular credit option – carry considerable interest charges.

Interest-free periods tend to be either for a set number of days each month but they can also be for a period of continuous months. For instance, a card provider might offer a 12-month interest-free period when you sign up. This can be especially useful for big purchases that you want to repay in instalments over a number of months.

4. Credit card-exclusive rewards and cashback

Some credit cards offer you rewards and even cashback when you pay for something. Popular cards reward you for travel bookings or making everyday purchases like the weekly food shop or your morning takeaway coffee. There are also credit cards that offer cashback rewards, typically anywhere from 1% to 5% on your buys. So it can quite literally pay to use a credit card frequently instead of your debit card.

5. Nice add-ons and complimentary extras

Many credit cards now come with additional perks. These can include travel, medical and home insurance; airport lounge and VIP area access; no or low fees on foreign exchange transactions; and a wide range of others. These additional features can help provide peace of mind and, in the case of extras like airport lounge access, nice little luxuries to look forward to.

Making credit card repayments the right way

While using a credit card provides you with these five great benefits, it’s important to be responsible with your repayment obligations to enjoy them to their fullest.

When you use a credit card, you’re basically using the card provider’s money to make purchases which you then have to pay back. It’s generally once a month that you make a repayment.

You usually have two options when making repayments. One, you can usually choose to make the full repayment of what you have spent with your credit card that month. Two, you can make the minimum repayment that your credit card provider requests. If you make the full repayment within an interest-free period, you pay back exactly what you spent with your credit card. If you opt to only make the minimum repayment, you’re probably going to incur interest fees on your account.

Your credit card provider should let you know from the outset of your contract with them what interest terms you’d be subject to. If not, be sure to clarify this when looking for a credit card provider as well as the interest-free period that you can take advantage of. The most important thing, though, is to make at least the minimum payment on time. Late payments can negatively affect your credit score. Better still to make full repayment if you can, so you don’t incur any interest charges.