Summer of spending: credit card spending jumps in August

With the lifting of Covid-19 restrictions came a jump in credit card spending. Here are some top tips for using a credit card successfully.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

A stack of credit cards piled on top of each other

Image source: Getty Images

Covid-19 restrictions were lifted at the beginning of summer, and it looks like Brits immediately hit the shops. According to data from Barclaycard, debit and credit card spending jumped by 15.4% in August when compared to the same period in 2019.

And while it’s nice to be able to go out and do things again, it’s not so much fun running up debt. So let’s take a look at how best to use your credit card to avoid any unwelcome interest charges.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!


Credit card basics

Having a credit card isn’t a bad thing. Used correctly, it can help you build up your credit score – and in some instances earn you rewards and cashback.

But knowing how best to use your credit card is key. It means that you can avoid finding yourself laden with outstanding debts and high interest charges.

Here are some of the basics to understand when it comes to credit cards:

  • You have a grace period on purchases – Most credit cards have some sort of grace period when you make a purchase. This is the time between the end of a billing cycle and when your next payment is due. During this time, you won’t be charged any interest on purchases – as long as you have paid your previous and current bill in full and on time.
  • You need to pay more than your minimum payment – It’s important to always pay your minimum payment, as failure to do so could have a negative impact on your credit score. But you should also aim to clear your balance in full each month. This is because any outstanding balance will incur interest charges, which can quickly build up.
  • Avoid cash withdrawals – ATM withdrawals using your credit card can be costly. Doing so carries fees and high interest charges that are usually charged from day one.


Dealing with outstanding balances

When we talk about an outstanding credit card balance, we are talking about what you currently owe on your card. So this could be purchases, cash advances, balance transfers, interest charges and fees.

Ideally, when you receive your credit card statement, you will repay that amount in full.

But if this isn’t possible – and you don’t have a 0% purchases promotional period – your outstanding balance will accrue interest. And due to compound interest, the amount you owe can increase quite rapidly.

If you find yourself in this position, then you could consider a 0% balance transfer card. With this type of credit card you can transfer your existing debt, usually interest free. You then have a set period of time in which to pay off the balance before incurring interest charges.

Balance transfer cards typically carry a fee, which is taken as a percentage of the amount of debt you have transferred. These cards are a good way of reducing the cost of your borrowing. By escaping high interest charges, you have space to pay off your debt before the end of the promotional period.

Dealing with credit card debt can be stressful. If a 0% balance transfer card isn’t an option, you can get more help and advice through organisations like StepChange or Citizens Advice.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

More on Personal Finance

Note paper with question mark on orange background
Personal Finance

Should you invest your ISA in a model portfolio?

Which model ISA portfolios offer both high performance and low fees? Hargreaves Lansdown, Interactive Investor and AJ Bell go under…

Read more »

Economic Uncertainty Ahead Sign With Stormy Background
Personal Finance

Is it time to exit emerging markets investments?

Investors may well be sitting on losses from emerging markets funds. Is it worth keeping the faith for a sustained…

Read more »

Personal Finance

Share trading? Three shares with turnaround potential

Share trading has been difficult in 2022, but which companies have turnaround potential? Jo Groves takes a closer look at…

Read more »

Man using credit card and smartphone for purchasing goods online.
Personal Finance

Revealed! Why Gen Z may be the savviest generation when it comes to credit cards

New research reveals that Gen Z may be the most astute when it comes to credit cards. But why? And…

Read more »

Environmental technology concept.
Personal Finance

The 10 best-performing sectors for ISA investors

The best-performing sectors over the past year invested in real assets such as infrastructure, but is this trend set to…

Read more »

Road sign warning of a risk ahead
Personal Finance

Recession risk ‘on the rise’: is it time for investors to worry?

A major global bank has suggested the risk of a recession in the UK is 'on the rise'. So, should…

Read more »

pensive bearded business man sitting on chair looking out of the window
Personal Finance

1 in 4 cutting back on investments amid cost of living crisis

New research shows one in four investors have cut back on their investing contributions to cope with the rising cost…

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Personal Finance

The 10 most popular stocks among UK investors so far this year

As the new tax year kicks off, here's a look at some of the most popular stocks among UK investors…

Read more »