Martin Lewis' guide to making credit card 'more powerful' than debit (2024)

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Martin Lewis' guide to making credit card 'more powerful' than debit? ›

Summarising the three rules to using credit cards like this, Martin shared: “You pay off in full, you never withdraw cash and you don't go over your credit limit.” Describing this technique as “incredibly powerful consumer jui-jitsu”, the money expert enthusiastically ensured the caller: “Tell your hubby, I'm on team ...

1. Pay off your balance every month. Avoid paying interest on your credit card purchases by paying the full balance each billing cycle. Resist the temptation to spend more than you can pay for any given month, and you'll enjoy the benefits of using a credit card without interest charges.

Bottom line. Credit cards offer the most benefits and protection against fraud, making them the overall best payment option. However, credit isn't for everyone. If you have a track record of overspending, it may be better to stick with a debit card until you can responsibly manage credit.

Credit cards give you access to a line of credit issued by a bank, while debit cards deduct money directly from your bank account. Credit cards offer better consumer protections against fraud compared with debit cards linked to a bank account.

The 2/3/4 rule: According to this rule, applicants are limited to two new cards in a 30-day period, three new cards in a 12-month period and four new cards in a 24-month period. The six-month or one-year rule: Some issuers may only let borrowers open a new credit card account once every six months or once a year.

The 5/24 rule states that if you have been approved for five or more credit cards in the last 24 months, you will automatically be denied for any Chase credit card products. This is to prevent consumers from applying to credit cards solely for the welcome bonus and closing the account before the annual fee comes due.

Paying your bill in full, on time, every month ensures that you will never pay interest on your purchases. A great way to make sure you never miss a payment is to set up automatic payments from your checking account.

Credit card flipping is the process of applying for credit cards to earn sign-up bonuses, then closing the account or moving on to another card, which can be bad for your credit score. However, this isn't often possible, as many card issuers have instituted rules to prevent this from happening.

Is it better to pay bills with credit or debit? ›

Be aware of any convenience fees you'll incur by paying your bills with credit cards. It's best to use credit only for products and services that won't charge a fee, and using cash, debit or bank transfer for the rest. And, of course, use a credit card only if you know you can pay off the balance each month.

For example, federal law won't allow a bank to offset your deposit account to pay off your consumer credit card account.

By paying your debt shortly after it's charged, you can help prevent your credit utilization rate from rising above the preferred 30% mark and improve your chances of increasing your credit scores. Paying early can also help you avoid late fees and additional interest charges on any balance you would otherwise carry.

Credit cards often come with several hidden costs that can add up quickly and cause you to go into debt even faster. These include late fees, annual fees, cash advance fees, or balance transfer fees (if applicable). There are also penalty fees for exceeding your credit limit (over-limit fees) and more.

Pay Off Your Balance

The golden rule of credit card usage is to do everything you can to pay off your entire balance each month. If you can do this, you won't be charged any interest.

The best way to use a credit card is to avoid paying interest by paying off the balance every month on time. Interest rates, known with credit cards as annual percentage rates, apply to purchases, cash advances and balance transfers for most credit cards.

Pay your balance every month

Credit card balances should be paid on or before the due date. Paying the balance in full has great benefits. If you wait to pay the balance or only make the minimum payment it accrues interest. If you let this continue it can potentially get out of hand and lead to debt.

Not paying on time

But it's best to always pay at least part of your credit card bill on time. Missing or late credit card payments can have a big impact on your credit score and fees.