The Big 5 Credit Card Benefits

Open the financial pages of a newspaper or visit one of the many personal finance web sites and you'll be sure to read warnings about the dangers of credit cards and the dire trouble that can result from irresponsible use of them. These dangers are real, but credit cards undeniably have their good points too if treated with proper respect.

As well as offering a convenient way of paying for purchases, they can also offer five major features which can really help you benefit from using them.

Balance Transfers

This is the most well known of all credit card promotions, and in its heyday was hugely popular. Introduced by Egg in 2000, balance transfers allow you to pay off a debt using your credit card and be charged 0% in interest on the resulting balance for several months. In the early days of balance transfers, the introductory period was typically 6 months, but nowadays it's easy to find cards offering up to 15 months of 0% interest.

In recent years, however, the popularity of balance transfers has waned somewhat after the introduction of the balance transfer fee, where you're charged up to 3% of the amount you transfer - quite costly on large balances!

0% On Purchases

Another kind of introductory offer is 0% interest on spending for a set period of months. During this period, you won't be charged any interest on your purchases using the card. These kinds of card are ideal for spreading the cost of large purchases over up to a year, but beware of mixing 0% purchases and balance transfer deals as the introductory period on purchases is usually much shorter than that on balance transfers, so interest will start to rack up while you're still clearing your balance transfer debt.

Cash Back and Rewards

There has been a recent upsurge in the amount of cards offering cash back or rewards. These two benefits are closely related, with both compensating you in some way for spending using your card. With cash back, you get a small percentage of whatever you spend credited back to your account. With rewards, you build up points in proportion to what you spend, and these points can later be redeemed as discounts on shopping, free gifts, or experiences such as spa visits.

In both cases, be sure to pay off your balance each month, or the benefits you gain will be more than outweighed by interest charges.

Charity Cards

Charity credit cards work on the same principle as cash back cards, refunding a small percentage of your spending, but with the twist that the cash back isn't paid to you but to the charity linked to the card, Charity cards are available for all manner of charitable organisations, from the RSPCA to the British Heart Foundation and many more.

The rate at which donations are made through charity cards is pretty low, and you could give more by donating your cash back earnings yourself, but charity cards make donating easy and the total amounts raised can be substantial.

Affinity Cards

Affinity credit cards is a general term for cards which reflect the holder's interest in an organisation or topic. The most well known types are football club credit cards, which are branded with your team's logo, and which also usually act in a similar way to charity cards, passing a small fraction of the money you spend over to your team.

So as we can see, there are many good reasons to carry a credit card beyond the simple convenience of payment that they offer. Just be sure to pay heed to those many warnings of the dangers of excessive spending, and you can really make your credit card work in your favour!