Play your (credit) cards right |

Ahead of Black Friday and the Christmas rush, here are five ways to be smart and sensible when it comes to managing credit cards. 

Beware low introductory rates
A card with 0% or a very low rate on new purchases, for example, can help spread repayments over a number of months. While this may seem like the answer to that pricey electronic gadget you were planning to buy as a Christmas present to yourself, it only makes sense if you’re able to pay off the balance on those bigger items before the higher interest rate kicks in.

Shopping around for the best credit card deal is never a bad thing; just remember to read the small print and always make sure you’ll be able to meet any repayments.

Avoid taking out cash on your credit card
Cash can still be convenient – and sometimes it might be the only way you can pay. But if you take out cash on your credit card, be aware that your provider is likely to charge you a high rate of interest on any withdrawals.

Either put the purchase on your credit card – but always keep in mind the importance of clearing any interest incurred on outstanding balances as soon as you can – or take out cash with your debit card.

Try to limit how many credit cards you get
While there can be benefits to taking out separate cards for different types of purchases, generally speaking, the more cards you have increases your exposure to fraud. Also, each new credit card application leaves a trail on your credit report history, which can make it more difficult to take out other types of credit in the short term.

With more cards, you’ll be exposed to more lines of credit and the overall amount you could borrow will be higher, meaning a bank might be less inclined to want to extend this even more. The knock-on effect means it could be tough when you’re looking to borrow for bigger things, such as a mortgage.

Your balance and your credit limit are different things
It’s all too easy to view your credit limit as your remaining balance – in other words, you convince yourself that it’s the amount of money you have left to spend and forget that you’re really in debt. In the longer term this may be unsustainable, as you could spend many months (or even years) paying back those festive binges!

Set yourself a percentage of your total credit limit
Many of us like to set life goals and fitness targets ahead of the New Year, but why not set yourself a financial target too? Banks advise on keeping a ‘credit utilisation ratio’ of under 30%. In plain English, this would mean that if your credit card has a limit of £10,000, then you should aim to keep your balance under £3,000. Sticking to this could help keep your credit score healthy.

Last, but not least, it’s good to make yourself a golden rule that you only use your credit card for purchases you’re able to pay back.

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