The way I use credit cards has changed in 2021 (and I’m better off for it)
I’ve been a holder of credit cards for a number of years, but using them for every transaction wasn’t something I used to do religiously.
However, since the pandemic kicked off last year, I’ve noticed that I now use, and think about, my credit cards differently. Thankfully, I’m better off as a result. Here’s why.
[top_pitch]
How has my credit card use changed during the pandemic?
In March 2020, little was known of the Covid-19 virus and how it spread. Of course, we now know it is predominately spread by close contact.
However, at the time, I didn’t want to take any chances. So, to limit my risk of catching it, I immediately switched to using cards wherever possible to avoid handling money. Previously, I’d often make small purchases with cash or my debit card.
That’s because I wasn’t always confident that smaller retailers would accept credit card payments, especially my American Express card, due to the fact that Amex charges retailers higher transaction fees than other cards. Therefore, using cash or a debit card was an easy way to avoid extra time at the till!
However, during the first lockdown, my habits started to change. As non-essential shops were ordered to close, I no longer had to worry about whether taking just my Amex card would be a wise move. That’s because all major supermarkets in the UK accept Amex.
As a result, I soon found myself leaving my home with just my card, keys and phone – no wallet.
Fast forward a few weeks, and I took this even further, ditching the card and taking just my phone and keys! That’s because I finally made the move to install Google Pay.
Previously, I’d assumed relying on mobile payments would be a faff. However, I found it soon comes naturally after you use it a few times. As a result, I loaded my Amex card as the default card on my phone and haven’t looked back since!
With Google Pay, you can also load multiple cards. This means I don’t have to worry about being solely reliant on one card. The only remaining obstacle is retailers that still don’t accept cards, though these shops are becoming rarer.
[middle_pitch]
How have my new habits made me better off?
Aside from the obvious benefit of being able to leave my wallet at home, my changing credit card behaviour has also helped me in two other ways.
1. I get extra protection on my purchases
If I buy something on a credit cost costing between £100 and £30,000, I qualify for valuable Section 75 protection. This means that if the retailer goes bust or there’s an issue with the product I’ve purchased, my card company is equally liable. This means I can ask them for a refund, which is often an easier route to go down as opposed to chasing the original retailer.
While spending over £100 is admittedly a rare occurrence for me, it’s nice to know that I can rely on this free consumer protection.
2. I earn cashback and rewards
Not all credit cards come with cashback or points rewards. But given that I own the Amex Cashback Platinum Everyday credit card, I’m fortunate to earn cashback every time I use the card. While the introductory 5% rate expired a while ago, I still bag a 0.5% cashback rate, which adds up over time.
I’ve also benefited from Amex’s popular ‘Shop Small’ scheme to the tune of £25 this year. This is where Amex gives a statement credit each time you spend more than £15 at selected smaller retailers.
Shop Small has since ended for this year, though I often grab Amex’s year-round offers. Most recently, I bagged myself £10 cashback when filling up £30 at BP. Sadly, the £30 didn’t buy me a lot of petrol!
Amex isn’t the only credit card offering rewards, so if you’re interested in being rewarded for your everyday spending, see our list of the top-rated cashback credit cards.
If you do go down this route, ensure you pay off your card balance in full each month. Otherwise, you’ll be charged interest, which can wipe out any cashback gains.
How can you find the right credit card for you?
I’ve already touched on the benefits of cashback credit cards, but if that’s not your thing, there could still be a credit card for you.
If you’re looking to borrow, then a 0% purchase credit card may do the trick.
Alternatively, if you have credit card debts, then a 0% balance transfer credit card could be your best option. If you have a poor credit score, then consider a credit card for bad credit.
For more information, see our guide to the different types of credit card.
The post The way I use credit cards has changed in 2021 (and I’m better off for it) appeared first on The Motley Fool UK.
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