It might seem surprising, but when used the right way, a credit card can help build your credit history. But they also come with risks – especially if keeping up with repayments is already tricky.
Let’s break it down. Here’s what to think about before using a credit card, plus why Zilch could be a smarter way to manage your money.
Credit cards and your financial health
Credit cards can be useful when you’re short on cash, and they can help build your credit score too. If you repay on time and use them wisely, they show lenders you’re reliable. But if you’re already dealing with bad credit, they could make things worse.
What is bad credit?
Bad credit happens when your credit score drops, usually because of missed payments, high levels of debt or financial difficulties. It can make borrowing more expensive and even stop you from being approved for some financial products.
If you’d like to dive deeper into what can cause bad credit – and how to fix it – check out our [in-depth article].
Credit cards and bad credit: a love-hate relationship
It might seem contradictory, so let’s break it down simply. Here are the pros and cons of credit cards:
The pros
- Building your credit history: Credit cards can help show lenders you’re reliable, as long as you’re paying on time and not borrowing more than you can handle.
- Boosting your score with responsible use: Consistently paying off your balance shows you can manage credit, which could improve your score over time.
The cons
- High interest rates: Many credit cards designed for people with bad credit come with sky-high interest rates. If you don’t clear your balance, it can get expensive fast.
- Debt can pile up quickly: It’s easy to overspend with a credit card, which could leave you with unmanageable debt – the opposite of what you’re trying to achieve.
Why Zilch is a great alternative
If credit cards feel like a risky choice, Zilch could be the answer.
With Zilch, you can shop smarter without worrying about high interest rates. Use Pay over 6 weeks or Pay over 3 months to spread the cost – or Pay now and earn up to 5% back in Zilch Rewards.
Looking to build your credit score? Zilch Up is our dedicated card for building credit, designed to help you improve your financial standing through responsible spending.
Zilch’s transparent, flexible approach to credit helps you stay on top of your finances. It’s all about keeping things simple and putting you in control.
How to use credit cards responsibly
If you do decide to use a credit card, here are a few ways to stay in control:
- Set a budget: Work out how much you can afford to spend and stick to it. Track your expenses to make sure you’re staying within your limits.
- Pay on time: Late payments can damage your credit score, so set up reminders or automatic payments to help you stay organised.
- Avoid overspending: Keep your spending within your credit limit and resist the temptation to use it for things you don’t really need.
Quick recap
Credit cards can help build your credit score if you use them wisely, but they also come with risks.
If you want a simpler, low-risk way to shop, Zilch has your back – whether you’re spreading the cost with Pay over 6 weeks or earning up to 5% back in Zilch Rewards when you Pay now.
Whatever you choose, the key is to stay in control, spend smart and do what works best for you.