Credit Report and Scores for Spending The Benefits of Using a Credit Card Wisely

Flexibility is about as worthwhile in a credit card as it is in a brick. It may come as a surprise then that this week's deal is the new flexible card scheme from RBS Advanta. It's not the fact it's malleable, but that if stretched the right way it becomes the best card on the market for spending on, possibly saving you over £500, just in time for Christmas.

The RBS Advanta U scheme follows Virgin, MoreThan and Accucard in allowing customers to configure the interest rate, introductory offer and reward scheme themselves. The marketing schpiel promotes the possibility of trading features off against each other to build 'the perfect card'. It may sound good, but in reality, it's as useful as a parachute when potholing.

Even at it's maximum configuration RBS Advanta U isn't a market beater for most uses. For example, it's best standard rate, using it's Platinum card with no rewards and no intro period is 10.9%, substantially more expensive than both Cahoot and Intelligent Finance.

Thankfully for RBS, it does win in one killer category. New cardholders can configure it to get 0% interest until June, that's longer than any other card's offer, and it pays cash back of 0.75% on spending, in other words for every £100 you spend on the card it gives you 75p. The previous market leader was Egg, which is interest free until March with 0.5% cash back.

The RBS Advanta U service is only available for new cardholders who are on the internet. The best spending card for non-net users, is the standard RBS Advanta card, at 0% interest for both spending and balance transfers until June, though it doesn't pay cashback, best for existing RBS Advanta holders is Egg.

Once the Advanta U introductory rate ends, the interest shifts to it's standard rate of 15.9% to 17.4% depending on whether it's a main or platinum card and the balance transfer rate selected. These rates are very high and there's absolutely no need to pay them. Simply ensure the debt is cleared in full or transferred to another card just before the interest-free period ends. Then use either another 0% introductory offer or a low standard rate card.

Used correctly this card will save you serious cash. Spend £1,000 monthly until next June, making just the minimum monthly repayments, on HSBC's credit card at 18.9% and, credit limit allowing, it's cost roughly £500 in interest. Even Cahoot at it's 7% standard rate, the market's lowest, costs £192. New RBS Advanta U cardholders with no interest and £60 cash back from spending are overall £250 better than Cahoot and £565 better than HSBC.

Credit cards often get a bad reputation in personal finance circles: They have high interest rates, they lead to ruinous debt, and they're evil! Many personal finance gurus hiding your cards or even cancelling and cutting them up. But before you go freezing your them in a block of ice, you should know that if used wisely there are many benefits.

Build your credit score
Regardless of your personal opinion, unless you're planning on paying in cash, many large purchases that you make throughout your lifetime will require good credit in order to qualify for a loan. And, depending on the value of your credit score, you may even get a better rate.

If you use them responsibly and pay off your balance each month, you will be able to build your credit score over time without incurring interest charges.

Earn rewards
If you're using a credit card and paying it off monthly, why not get the card company to pay you? Many cards offer rewards in the form of points for travel, merchandise or services. Some offer a percentage of your spending back in the form of cash rewards. Still others may let you stay in hotels for free.

A great way to maximize your rewards is to choose a rewards card from a store or a service that you use very often. So if you travel a lot, get a card with travel rewards. If you mostly use your the card for groceries and utilities, get a card that gives you free groceries or cash back.

Maximize convenience
Let's face it - using a credit card is much more convenient than using cash or a debit card. Cash can't be replaced if lost and can be bulky. Debit cards can come with transaction charges depending on the bank or the retailer. With charge cards, you only need to carry one piece of plastic and you never have to worry about additional charges... unless you don't pay off your monthly balance!

They are also a convenient way to organize your bill payments. Instead of having to keep track of 3 or 4 different bills, you can pay each bill automatically through your card and then simply pay your credit card off each month.