Using a credit card can help you manage your spending with confidence. Taking out a loan can be an onerous task. There is normally a vast array of questions to be answered, covering all aspects of your financial history and circumstances. Probably the easiest and quickest method of obtaining a loan is to use your credit card. If you have a good payment record, by regularly paying off your credit card in full each month, or by paying the required amount on the due date, then your credit card limit will be in line with your monthly requirements.
It is much more convenient to be able to make those spontaneous purchases, such as expensive designer clothes, or the latest electronic equipment, without having to worry about having enough money sitting in your current account. Even if you do keep a large balance in your account, it is likely that it not earning you any interest, and therefore not making the best use of your funds.
Credit cards also provide protection of the purchase, which is particularly useful when buying online. By using your credit card you can have considerably longer than one month’s credit, depending on when in the month you make the purchase. You then have plenty of time to transfer money to whichever account you use to fund your credit card.
Having a good payment record on your credit card also improves your general credit rating. Some credit cards also offer incentives and discounts to attract customers. For amounts of up to about £5,000 some cards offer 0% interest rates, usually over a fixed period, so as long as you clear the balance by the end of the fixed period, the arrangement has not cost you anything.
Other forms of loans are probably cheaper for larger, long term purchases, as the interest rates on credit cards can be quite high over longer period of time.
Some times though, you may find you are rejected for finance because you have a bad credit past. The solution is personal loans for bad credit, which are specialised finance packages designed for you if you have a poor financial profile.