Benefit 1
One of the main benefits of using a credit card rather than a debit card is the protection provided by the Consumer Credit Act. This says that if you have problems with goods or services - such as a supplier going out of business or failing to deliver - you can get your money back from the card issuer if you can't get it back from the supplier (provided that whatever you bought cost between £100 and £30,000).
Benefit 2
Some cards provide purchase protection insurance, which pays out if something you have bought with the card is lost, damaged, or stolen within 90 or 100 days of the date of purchase. However, this type of insurance doesn't cover all purchases - secondhand or perishable goods, for example - and there's usually a limit on how much you can claim. This kind of insurance is not worth having if it duplicates cover you already have under your home contents insurance, which it probably will if you have 'all-risks' cover.
Benefit 3
A credit card can cost nothing - if you pick a card that doesn't charge an annual fee and you always pay the bill in full every month. Most cards charge interest only if you leave part of your balance unpaid.
Benefit 4
A credit card can save you money if you choose one that earns you cash every time you buy something. How much cash you get back is calculated as a small percentage of the amount you have spent on the card. Some cards offer incentives other than cash - Air Miles or shopping vouchers, for instance.
Benefit 5
Even if you do not pay your monthly bill in full, a credit card can be cheaper than running an overdraft on your current account, especially if your bank charges a monthly fee as well as interest when you overdraw.
Benefit 6
Using a credit card can work out cheaper than using traveller's cheques or foreign currency to pay for things abroad. This is because the exchange rate used by card companies to convert foreign spending into sterling is better than normal tourist rates. However, because of credit card charges for cash withdrawals (see Credit card traps to avoid), a debit card is better if you want to use plastic to buy currency, whether over the counter or from a foreign cash-machine.
Benefit 7
You can give to charity for free if you sign up for a charity credit card. When you first use the card, the card company makes a one-off donation of between £5 and £10. How much the charity gets after that depends on how much you spend, but it's typically 25p per £100 spent.
