A credit card allows cardholder to borrow as much money (up to their credit limit) as they like, when and where they like, without having to get permission from their bank manager.

All credit cards have finance charges for not paying your balance in full each month, but you could save a lot of money by shopping around for credit card that offers you best terms.

Shop for a card with an interest free period that gives you enough time to pay your bills on time without charging you interest. Credit cards with no interest free period start charging you fees as soon as you buy something on your credit card.

Finally, using a credit card gives you a credit history, which helps to get home loans and other credit in future.

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You can give to charity for free if you sign up for a charity credit card. Credit cards are often cheaper than loans for short-term borrowing. You pay interest on remaining debt, not full amount - and there are no early redemption penalties.

Credit cards offer flexibility to match uneven income and expenditure patterns: you choose what to pay off each month, between minimum and total outstanding.

Their consolidated accounting enables one cheque to settle multiple transactions – while all appear neatly on one pre-prepared statement each month.

There is an automatic ‘interest free' period per statement period.

Credit cards enable remote purchasing via internet, by telephone or mail order.

Credit cards can include additional benefits like insurance cover on purchases, cash-back, AirMiles, Nectar or Reward points, and holiday discounts.

Here are some of drawbacks of using a credit card:

Credit cards can be unnecessarily costly.

Credit cards may be expensive for cash withdrawals

Credit cards may be expensive for foreign currency purchases.

Their credit limits can be insufficient for your requirements.

They encourage a ‘pay now, worry later' mentality and make it too easy to get into debt.

Credit cards are very open to fraudulent use.

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