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Summer of spending: credit card spending jumps in August

Summer of spending: credit card spending jumps in August
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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.

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.

Pay 0% interest on new purchases and balance transfers for 22 months – and earn reward points every time you shop!

The M&S Shopping Plus Credit Card* offers shoppers a 22-month 0% interest period on both new purchases and balance transfers. Not only that but you can also earn retail reward points every time you spend – whether in store at M&S, or elsewhere.  21.9% representative APR (variable)

*Affiliate Partner.

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