Credit card management: How to handle your payments – ‘Stop treating them like a loan’

Credit card usage has likely increased in recent months as coronavirus left people with few financial options. The FCA took steps to make this situation as manageable as possible for consumers by extending payment holiday rules to debt obligations.


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These rules were recently extended once more by the financial regulator on June 19.

As their announcement detailed, firms and lenders were to be expected to provide credit card, revolving credit and personal loan customers with additional support in the coming months.

The announcement confirmed the following: “For customers yet to request a payment freeze or an arranged interest-free overdraft of up to £500, the time to apply for one would be extended until 31 October 2020.

“For those who have already taken up support and are still experiencing temporary payment difficulties due to coronavirus, firms would continue to offer support with options including a further payment deferral or reducing payments to an amount the customer can afford for a further three months.”

While this will be relieving news for struggling consumers, it should be noted that it is still temporary in nature.

Eventually, credit card users will need to get back to covering their debts, which may even be worse in the long term due to accrued interest.

In a worst case scenario, some families may still depend on their credit cards post lockdown even if they’ve built up a huge debt already.

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Thankfully, there are steps that people can take and advice they could heed when it comes to managing their spending.

Holly Andrews, the Managing Director of KIS Finance, provided her tips for making sure credit cards are utilised effectively:

Stop treating them like a loan

A simple change of perspective could be useful in the long term, as Holly explained: “One of the worst things you can do with a credit card is to treat it as if it’s a loan, and especially a long-term one.


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“Credit cards should be used for needs not wants, and purchases that you can otherwise afford but you want to use a credit card in order to build up your credit rating.

“Credit cards are great for things like groceries and essentials, for example, and not for lavish expenses such as holidays and designer goods. Buying things that you can’t actually afford will just lead to debt.

“Although credit cards are helpful and can be a lifeline if there’s an emergency and you don’t have any alternative options, it’s not good for your credit score to hold large credit card balances – not to mention the amount you could end up paying in interest.”

Her next tip concerns the difficult nature of restraint:

Don’t max them out

Despite consumers likely having good intentions, they may unfortunately fall prey to temptation.

Some people may view what their credit cards provide as “free money” but this could be hugely damaging: “Although it can be very tempting to spend all of your credit when it’s right in front of you, doing so will really damage your credit score.

“Maxing out your credit cards can make it look like you have bad money management skills or you’re desperate for cash.

“A sensible way to use a credit card is by only spending a maximum of 50 percent (30 percent or less is ideal) of the limit every month as, number one, this will be easier to pay off in full every month and, number two, it will really boost your credit score.”

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