Consumers are becoming keener to use plastic instead of cash to pay for goods, according to a new report.
Figures gathered by the British Retail Consortium (BRC) suggest that just 52.57% of retail transactions were completed using cash last year. This compares with 54.35% in 2012.
The BRC suggested that the added convenience of online shopping and contactless payments was a key reason for the surge in card payments.
The report said that consumers are using debit cards more often, but they’re using credit cards for higher amounts than previously.
There are many reasons to use a credit card when you buy goods – large and small. Here are our top five.
Many credit cards will give you a percentage of your spending back as a cash refund, meaning it pays to use it as much as possible.
The American Express Platinum Cashback Card, for example, lets users earn 5% cash back for the first three months up to £125, and then 1.25% cash back thereafter.
Customers who spend £500 a month on this card can therefore earn £131 cash back in their first year.
The Which? credit card comparison tables let you search all available cards from all providers large and small to choose the best deals based on quality of service as well as cost and benefits.
Which? comparison table: – Best credit cards for cashback – our tables are updated in real-time
#2 Rewards and discounts
Some credit cards offer rewards in the form of vouchers and discounts when used at certain shops and supermarkets.
If you’re a regular customer at a particular store, it could pay to use that retailer’s brand of credit card and stack up the reward points on offer.
Which? comparison table: Best credit cards for retail rewards – our tables are updated in real-time
#3 Extra protection
When you buy goods or services priced between £100 and £30,000, your purchase is protected under section 75 of the Consumer Credit Act.
This law says that the credit card company is jointly liable for any breach of contract or misinterpretation by the retailer, making it easier to get your money back if there’s a problem.
If you buy goods outside of this price range, you may still be protected by the chargeback system.
Know your rights: section 75 of the Consumer Credit Act – find out more about this protection
#4 Boost your credit score
If you create a strong record of paying your credit card bills on time, it can enhance your chances of being accepted for other forms of credit in the future.
Successful repayments are recorded on your credit report, boosting your credit rating and showing lenders that you are a responsible borrower.
Many consumers apply for credit cards specifically to improve a poor credit rating or to build a positive credit history from scratch.
Which? comparison table: Best credit cards for bad credit – our tables are updated in real time
Stoozing is a term used to describe the process of spending money on a 0% interest credit card and storing the additional funds created in a high-interest savings account.
Provided you meet the minimum monthly repayment conditions on the credit card and pay off the remaining balance before the 0% deal expires, you can potentially earn hundreds of pounds a year doing this.
Our guide on reasons to apply for a credit card explains this process is in more detail.
Make sure to pay off your monthly bill in full
These benefits are only like to be worthwhile to credit card users who are able to pay off their balance in full every month. If you don’t, the interest charges will soon outweigh the rewards.