What's up you guys, sasha here, i've recently tried to watch a few videos on youtube which explain how credit cards work and, unfortunately, the more i watch the more. I realize that there's a lot of videos out there that are really bad at explaining. Fundamentally, how different credit cards work, and i was really surprised in the fact that quite a few of these videos just quite simply get a bunch of things wrong. They just don't get them right at all and, as a result, a lot of people probably don't get.

The best possible answer now in this video i'm gon na try to do my best to give you exactly the full breakdown of how credit cards work, all the different key things that you need to know if you're brand new to credit cards. Hopefully, this will explain everything in as much detail as possible. I'm gon na try to keep it as concise as is possible so that this video doesn't go to a whole hour or some crazy amount of time like that. So, apologies for the brevity of some of my explanations, but i'll do my best to condense it all together.

Just in case you're wondering who i am. My name is sasha, and i've worked in retail banking, specifically in credit cards for the vast majority of my career, and i have worked all the way from being an analyst at capital, one in my very first job after graduating all the way through to being an Advisor and a consultant to some of the world's largest banks and credit card companies over the last six years, so i've been around the block a little bit and i guess i've seen various different companies in various different countries do credit cards so hopefully you'll get a Relatively well-rounded explanation in this video now i am going to leave quite a few links in the description below to some of my other videos in case you're interested in some of the more detailed answers to some of the things i'm going to be talking about. So make sure you go and check that out below if you're wanting a bit more information, i'm also going to be talking from the position of being in the uk. Now, throughout this video i will mention - and i will highlight the things where things are different in the us and how they're different in case you're, watching it from the us or some other place that has somewhat similar stance on credit cards.

It's really important to know that credit cards are really different in different countries, even within europe. The way the credit cards work in germany or the way they work in ireland is somewhat different to the way that they work in the uk and the way they work in the us. So it's just really important to know that whenever you're watching content about things like credit cards, you really want to be watching content. That is focused on your particular geography, because some of the concepts, some of the things that are being said, are just fundamentally not the same in the country where you live.

If you don't now, let's get started, let's answer the first really simple question: what is a credit card now? It sounds simple enough, but in lots of parts of the world and lots of people don't actually really understand what it is. For example, in countries like germany or large parts of eastern europe, things like debit cards that are associated with bank accounts are called credit cards, because pretty much every single piece of plastic is called a credit card in those countries. Now, here is a really simple definition: a credit card is a type of financial product that allows you to borrow money flexibly on a revolving line of credit. But what does that mean? A credit card provides you with a permanently available line of credit.

What this means is that you can borrow as much or as little as you like, whenever you like. As long as the amount that you've borrowed in total from the credit card provider is less than the credit limit that the company has set. So what they say is that you can borrow up to this particular credit limit, and you can do it in any way that you, like you, can use the credit card to go and pay in shops. You can use the credit card to go and withdraw cash.

Maybe you don't want to do that because it's expensive i'm going to get to that in just a second or you can do a few other things as well. But in any case it is up to you. You can go and put a two pound transaction on your credit card and that'd be the only transaction on it. Even if your credit limit is 20 000 pounds or you can go and make large purchases of several thousand pounds by using that very same credit card, it is completely up to you and the repayment is not structured like a loan.

The repayment is also flexible. Now, first, let's talk about some of the basic principles of how credit cards work. First, let's talk about the application. When you go and apply for a credit card, you either go through a comparison website where you fill out.

One application form to check your eligibility and then click through to the credit card that you have chosen and then fill out their form as well or you go and fill out an application from directly with a credit card provider if you've chosen them based on some Other criteria, the choice is kind of up to you. What will happen once you have filled in the application form? Is the credit card company? Will then take your data and match you to the data held about you on one or more credit reference agencies? There are three different credit reference agencies in the uk. They are called transunion, experian and equifax, and most of them will hold data about you, they're, not exactly the same, because they have slightly different methods of collecting and obtaining and retaining their data, and some providers only provide data to some of them, but not all of Them and there's historical differences in the type of data that they go and capture anyway, i'm not going to go into the full detail about that. But what will happen is the credit card company will go and capture that data about you and, together with the information that you supplied in the application form, make a decision as to whether or not you're going to be accepted and what they'll then do is either Inform you sorry, you have not been accepted because they didn't meet our minimum criteria or they'll.

Tell you that you got in credit card. Companies typically run a three-stage process in determining who gets accepted. The first stage is called a set of policy rules and the majority of credit card companies run their processes. This way and the policy rules are just yes, no check mark questions which determine whether you're going to be accepted or not, while some of them are really basic, like are you over 18? Are you based in the uk, etc, etc? Some others may be not quite as straightforward and are actually based on your credit history.

So, for example, if you've had a default on your credit cards in the past, let's say within last three years: a lot of credit card companies will decline you just simply, if you have that marker on your file or some other strongly negative markers like, for example, If you are currently behind on some payments on credit, the next part of the application process is something called a scorecard, and this is something slightly more complicated. There is a bunch of variables that the company takes either from the application form or from the data that they obtained from the credit reference agency and they're, going to sign points depending on what you have for these different variables. For example, they might go and take your total amount of credit available or the total credit outstanding and say if it's between zero and five thousand i'm making these up. You can get plus five points, but if it's from 25 000 to 30 000 pounds of debt outstanding, maybe you subtract 10 points or something like that, and what they'll do is they'll add up all these different points and you'll get a score that each credit card Company has that is specific to that credit card company and is different from what all the other ones are doing and they'll have a cut off and they'll say.

If your score is above, let's say 317, then you will get accepted and if it's below that unfortunately you're going to get rejected. One really important thing to note in this section is: when you apply for a credit card, you will see something called the apr. The api is the annual representative rate and it's basically the rate that you will have to pay for your credit. According to this weird and wonderful formula, the credit cards have to use in order to work it out.

It's probably not the best actual representation of the cost, but unless your credit card has an annual or monthly fee that is going to be pretty much equivalent to the purchase interest rate on your credit card, which is hopefully the majority of the types of transactions you're Going to be doing on that credit card, what will happen in some cases during the application process is, if you are a higher risk customer versus the average. That applies for that credit card and gets accepted, but you still pass the minimum qualifying criteria. You may be offered a higher apr and a higher set of interest rates as a result. Because of that and it'll be up to you at that point as to whether you want to accept that or not up to 49 of people who apply for a credit card might go and get one of these higher apis rather than the one that's advertised.

So, if that happens to you, that's why there are several different types of credit cards. Some credit cards are just vanilla that don't really do anything other than allow you to borrow money and improve your credit in the process. Some other credit cards exist for transferring balances, which is essentially paying off a higher interest credit card with a lower interest credit card, some others allow you to get long-term teasers on things like purchases. So, for example, you might not have to pay any interest for a period of let's say two years and others allow you to do money, transfers which are sending money from your credit card to your current account in exchange for paying a fee and having interest due On that, after the initial zero percent period ends, there are also several different tiers of credit cards, depending on your credit profile.

So for people who are brand new to credit cards or have had issues of credit in the past, some of the initial lower tier credit cards will be things like aqua or marbles. By new day. Things like vanquish, tesco, bank and barclays offer a stars credit card as well, and there's some others as well. I have a whole video dedicated to that in the description below, if you're interested all the way up to super premium.

Credit cards provided by the like of american express and some very, very difficult to get credit cards as well. If you're interested in that check out the video about the four different tiers of credit cards that i also have in the description below now, let me super quickly explain two key concepts about how credit cards work that are really important in understanding the fundamentals behind credit Cards the first of these is called the monthly cycle. So the way the credit cards work is everything runs on this monthly cycle and the first date that is really important in this monthly cycle is your statement date. So every single month, there'll be a date.

During that month, typically between the first and the 28th of the month, when your monthly statement will be generated depending on whether it falls on the weekend or something else like that, like a bank holiday, it may be generated just after or just before that date, it Doesn't really matter, there'll be one date roughly when all your statements will be generated, and what will happen is from that moment. You then have a month until your next statement is generated. Any money that you go and spend during that month will be part of your transactions on that statement. Any money that you have not paid off in full from the first statement will then be due on the next statement when that statement comes up.

In addition to all the new transactions that you've made, the next part of the billing cycle happens after the statement is generated. So when the statement is generated, then have a fixed period of time in which you have to make a repayment and that repayment has to be anything from the minimum payment which, in the uk for most credit cards, is going to be very, very low. Usually something like one percent of your outstanding balance, plus all fees and interest due or in some cases, it'll be a fixed number like three percent or four percent of your total balance check your credit card specific summary box. In order to understand what that is going to be, but in most cases, you'll get something like 25 days in order to make that repayment in some cases will be shorter, depending on the specific type of credit card that you have.

The next important concept with credit cards is the concept of balance categories. Now there are three or four different balance categories, depending on which credit card it is that you use and they are purchases, cash balance, transfers and, in some cases, money transfers and the reason that there are four different balance categories is because credit cards associate these different Categories with different levels of risk and as a result, they are typically priced differently. The way that the transaction actually flows through in the background, in terms of the way that the payment actually goes through, is also a little bit different, and that's also part of the reason why now, typically, purchases are the cheapest out of these, and cash is the Most expensive out of these four different categories, with balance, transfers and money transfers somewhere in between now the one really important difference is this purchases are the only one out of these four different transaction types in the vast majority of cases that doesn't attract a fee. So whenever you make a purchase in a shop using your credit card, you will not be charged a fee by your credit card provider for doing that.

If you do a balance, transfer a money transfer or withdraw cash from a cash machine using a credit card, you will have to go and pay a fee. In most cases it will be three percent with a minimum of three pounds. So if you're spending anything below a hundred pounds on these types of transactions, you will still pay a three pound fee. If you do one of those three things, the other important thing to note is: if you're making purchases, if you repay your credit card in full every single month, you will not have to pay any interest.

That same thing does not apply if you're withdrawing cash. If you go to a cash machine, stick your credit card in withdraw the cash and then repay the credit card in full. In just one week's time. You will still have to pay interest for the seven days that your credit card had a cash balance on it or until that payment has cleared and the reason is cash.

Interest is charged on a daily rate, irrespective of whether you're paying in full or not. Irrespective of anything else now briefly, let's talk about credit limits. A credit limit is set when you first apply to a credit card, and that is the maximum amount of money that you can borrow on. That card.

That credit limit is the sum of the different types of balance, fees and interest that you can have on your account at any one time. So if your credit limit is, let's say one thousand pounds, you can't have a thousand pounds in purchases and a thousand pounds in balance, transfers and a thousand pounds in cash. The sum of all of those different buckets, if you like or balance categories, has to add up to something less than that limit, but be really careful because fees and interest are also going to be part of that total sum. So if you go and say, withdraw some cash or do a balance transfer and get your account really close to your credit limit, then that three percent fee could actually take you over your limit and i'm going to cover slightly later in this video.

Exactly what would happen in that case also just be really careful that when your statement is generated, fees and interest get calculated and added at that point. So if you are really really close to your credit limit at the point when the statement is generated - and you are paying interest, then when that interest is added to your account, that might also take you over your limit now, let's briefly talk about interest now i Already covered what apr is just slightly earlier, but let's now talk about paying interest now. One really simple thing to note is: if you repay your credit card in full every single month and you're, only making purchases on that credit card, so you're not doing any cash or draws or other stuff like that, then you will not have to pay any interest At all, so as long as every single month, your credit card is repaid in full. You won't ever have to pay any interest.

If you pay any amount less than the full amount, then you will have to begin paying interest on any money. That is sitting on your account as a balance that has not been repaid in full. Now. What is this grace period that people talk about? There's this up to 56 days or something like that grace period that is often used in advertising and marketing materials and a lot of people get confused and wonder what that is, and why do credit cards offer it and this the truth of the matter is it Isn't actually anything special? There isn't some special feature or some kind of special cool thing about credit cards specifically, the creates this grace period is just a really simple calculation and it goes a little bit like this.

Let's say you have a statement and you begin spending money on the very first day after your first statement is generated. Let's say, then that you have a 31 day month. So that means that the next statement is generated in 31 days. What the 56 days up to 56 days, interest-free period really means is that if you made a transaction on the first day of the statement, then you had 31 days until the next statement was generated.

And you then have 25 days until the last day in which you can make a repayment called the payment due date. That means that you have the ability to go and spend that money on that very first day of the statement and wait all the way until that payment due date, which is 25 days after the next statement before repaying it in full. And if you do that, you won't have to pay any interest. So that's what that up to 56 days, grace period on credit cards means note that some credit cards operate a slightly shorter window for making the repayments, as i mentioned earlier, so go and check your terms, conditions and your summary box to go and find out exactly What your maximum grace period is if you're interested now credit card interest is charged on a rolling daily basis, and what this means is that interest is calculated for every single day, that you carry a balance on your credit card up to when that balance is repaid.

In full - and that's really important note, because a lot of people misunderstand this to some degree now, if you repay your credit card in full and you're only making purchases, you will not have to pay any interest as i mentioned, but if you do not do it, If you have a balance already on your credit card and you're, then making further spend spent on the credit card, or even if you don't you'll, then have to go and pay interest on that credit card. But if you go and repay your credit card in full at some point in time, you might be surprised that on the next statement you are still having to pay interest and this concept is called trailing interest. Let me explain exactly why it exists, because that will help you understand better how credit cards work so because credit card interest is charged on a daily basis. Up to the point, when you made the repayment, let's say you made repayment for argument's sake, 10 days after your last statement was generated.

Your last statement calculated the interest that was due to the credit card up to that date on which the statement was generated. So the next 10 days before you repay the credit card in full, you are still paying essentially interest on that amount of money, but you don't have that interest calculated until the next statement is generated, which will be some point after you've actually made the repayment in This case roughly 20 days, for example. So what will happen is at that point, when the statement is generated, they will work out that for 10 days out of the 30 in that month, you should have been paying interest and they'll go and calculate how much that is and print it on your statement. So if that happens to you, that is why it happens.

If you had a balance that previously was incurring interest, and you then repaid the credit card in full, you will have to make two full repayments before interest stops being charged on your statements and then from then on, if you're only making purchase on a credit card. You will not have to pay any interest again now. There are two interesting things to note about interest number one. Your interest rates can be increased over time.

This is one that is different in the us to the uk in the us. It is actually banned and you are not allowed to go in interest increase people's interest rates in the uk. This is a common practice and credit card companies can use multiple different reasons for doing it. They can blame it on economy and their own performance and they can do a portfolio reprice or they can claim that you are a high-risk customer out of their sort of total number of customers and as a result, they go and reprice you.

The truth is, most people who are repriced are not actually high risk and they can probably go and get a better product elsewhere. I'm not going to go into the depths of that, but what will happen is they will send you a letter and they'll say that in 30 or 60 days time, depending on the credit card and how they go and implement these changes, your interest rate will increase And they'll tell you what your new rate is and in some cases it can be quite a big jump. But here is the really important thing is you can go and reject this increase? If you choose to do so, what will happen if you do that? Is you will have to go and close your account and you won't be able to use it any longer, but you will be able to repay it at the old interest rates. The second thing about interest rates that is interesting is quite often you'll get promotional interest rates.

Often, promotional rates apply to the credit card when you first get it sort of being an introductory zero percent period on purchases or 0 period and balance transfers, or something else like that, but in some cases, especially with barclaycard, they seem to do this. A lot they'll send you a letter saying hey: would you like a zero percent promotional rate for 12 months and you can go and make use of that if you're interested so go and look out if you do ever need any of those kind of benefits? Some credit card providers will have them available to you. You can go and check in your online account if you're wanting to go and see if there's something available to you right now, just be really wary that all zero percent terms exist, so that customers go and build up a big balance in the hope that at The end of the zero percent period, that balance is still there and you begin paying interest on it. That is the whole trick.

That is basically why they exist, so don't fall into the trap of borrowing money when you shouldn't be when you didn't want to borrow in the first place, just because somebody's offering you a zero percent teaser, because you might find yourself paying interest for quite a long Time afterwards, just to go and repay that debt. Now, let's really quickly cover fees. Now, credit card providers charge a different number of fees by provider, but it can be as many as 13 and it can get very complicated when you're looking down the table of different fees charge and exactly what they are. Let me break it down in a super simple way.

First, there are two different penalty fees in the uk. The maximum for each of these is 12 pounds and they're the late payment fee and the over limit fee. They're really really simple. The over limit fee is the fee that's charged.

Whenever you go over your limit and a credit card provider will charge you 12 pounds, typically at the point when that happens or the next cycle. So when the next statement is generated and the second type of fee is the late payment fee which is charged, if you don't make at least the minimum repayment between the date when the statement is generated and when the next payment due date happens. So if you don't make any payment or a payment that is lower than the minimum amount, you will also be charged a late payment fee of 12 pounds now really quickly in the us. The fees are slightly different since the card act was passed in 2009.

The over limit fees, which are legally restricted to 25.35 are mostly not charged by the big providers any longer because of some of the complications that incur when they charge those fees, but they do charge late payment fees and the late payment fees are quite a bit Higher than the uk they're up to 29 for the first offense and 40 for each subsequent offense, that happens after that. So if you're going two or three payments behind you're gon na get much higher fees as a result, uh don't do it because it can quickly spiral out of control and, as those fees all add up, the minimum payment that you have to make goes that much Higher just be really careful, the same applies both to the uk and to the us missing. A payment is a really bad thing, because not only do you get charged that fee, but also the credit card company will then report this information to the credit reference agencies and then your future eligibility for credit products will also be hurt by having those markers on Your profile, i'm not going to go into some of the less common fees, because that will take too long, but i'm going to talk about the next big group of fees that is often charging credit cards and they're called spend fees. Now, as the name implies, these apply when you go and spend on your credit card, so if you go and do a balance, transfer or money transfer or withdraw cash, you will typically get charged a fee in most cases, as i mentioned earlier, it is three percent.

It can be as high as five percent, depending on your credit card provider and those fees get added as and when that transaction happens, so just be really careful if you're doing any transactions and incur them that you go and account for the fact that that fee Will also be added to your account, the third type of fee that people charge in the uk and in the us a lot more frequently actually than in the uk, is an annual management fee. It has slightly different names depending on the credit card provider and the country that you're in and it can be charged in either one big annual payment or it can be charged in smaller monthly installments. Instead, it depends again on the credit card provider as to how exactly it works, but, in essence, is just a simple fee that gets charged every single month for the privilege of being able to use your account. It is much more common on more premium credit cards where there's more perks, more benefits and more reasons to have that credit card, and it's very common on charge cards as well, which are not the same as credit cards, but share lots of the characteristics.

Now, let's quickly cover repayments now, payments towards a statement are only counted if they are made between when the statement is generated and the payment due date. That's right, if you make a payment that happens between the payment due date from the previous statement and when the new statement is generated, it will not apply to either the previous statement or the new statement. It will go against your balance, so it will count in the sense that you will repay some of your debt, but it's not going to be counted to any of your statements. So if you are wanting to make sure that the payment you're making is gon na impact, your statements so that you don't have to pay a payment fee so that you get at least a minimum payment paid on, your account make sure that that payment is made.

And processed by the credit card company between when the statement is generated and at the very latest on the payment due date, there are generally three different ways of making payment to your credit card and they are one you can go, make a manual payment. So if you go on the website of your credit card company and go and type in all your details, you will process a manual payment, be very careful that manual payment can take one or in some cases, even two business days to actually go through and process. So if you say making a payment on a saturday, it could be on the monday or the tuesday after that, payment will actually be processed to your account. So if your payment due date, is that saturday or let's say it's even the sunday or even the monday after just be super careful because you might still miss your payment if you go and use that option, make sure you leave at least a few days.

If you are going to be doing that, the second type of payment you can make on a credit card is by doing what's called a faster payment in the uk, or direct transfer in the us works slightly differently in the u.s. Because of the way bank transfers work and the fees that are applicable, so i'm not going to go into too much depth on that. But if you're, based in ek and you're watching this, if you're making a payment from your bank account to the bank account of the credit card company, that payment will typically go through very very quickly unless your own bank blocks it for potential fraud or delays it By reviewing it before sending it on now in most cases, and you have to be very careful to check exactly how this works in most cases, the way that it works, is you send it to the bank account that your credit card company gives you and you Use your credit card number as the reference and the receiving credit card company will then go and take that payment and apply to your account, usually within minutes, in some cases, within two to four hours, but most often the very same day, especially if you're doing it Early in the day, the last method that you can use is called the direct debit or autopay in the us, and the principle is exactly the same. You give the credit card company permission to automatically debit your current account or checking account and every single month on the last possible day so on the due date.

Whenever that is the credit card, company will go and take the payment you can set it to be. Just the minimum payment, if you want you, can set it to be the full payment. If you want, and in some cases credit card companies offer you some options in between like a fixed percentage of your total limit or balance or some other weird and wonderful options. As well now, the direct debit is the safest option out of all of these.

So unless your account that the money is being drawn from doesn't have enough funds and the payment balances, you are guaranteed to not have a late payment registered. So, if you're, the kind of person who really likes for whatever reason, making manual payments, because that's your thing and you're like doing them whenever you choose to do them, you might still benefit from setting up a minimum payment direct debit, so that in case something happens And you just forget, or time runs away from you, the minimum payment still goes out and you don't get a missed payment flag on your account and you avoid all the difficulty with that. If you, for some reason, do not make at least a minimum repayment on your credit card, two bad things are going to happen to you. The first bad thing is going to be that the credit card company is going to begin chasing you.

They will try to begin calling you in some cases, they'll begin sending you letters with big red writing on them, saying that you owe them money, and you know that's pretty bad in itself. In addition to that, the credit card company will also charge you a 12 pound late payment fee, and that's not very nice as well, and if you previously had been paying a credit card in full, you will now have to begin paying interest. On top of all the balance that you haven't repaid and it can quickly snowball into a whole load of wasted money, the second bad thing that will happen is they'll actually report, this information to credit reference agencies, so the credit reference agencies will now know that in That particular month, you did not repay your credit card, so if you're looking to apply for other credit in the next three to six months, that might affect your ability to qualify even beyond that, if you're applying for a mortgage in the next 12 to 18 months. Having that one missed payment might be quite a strong negative marker which will influence the ability to go and get a mortgage as well, so be super careful.

That's why i always recommend direct debits to people be super careful, do not go and miss payments. On your credit card, because it can have a substantial impact on your eligibility for credit products in the future, now just for completing the sake. If you continue missing payments month after month after month, then the following will happen after approximately four to six months, depending on which credit card company and country you're in because the accounting practices are slightly different, the credit card company will go and send you a letter Which is going to say that you are going to be charged off if you don't make a repayment in the next 30 days, and what will happen is if you don't make the repayment and bring your account up to speed at that point, then your account will Go through what's known as a charge-off process, so essentially your account is marked as a lost amount of money by the credit card company. Your account is struck off their balance sheet.

If you like, i'm not going through the most accurate description in terms of the accounting, but just to make it really simple, and what will happen that point is the credit card company can pass you either to their own recovery department, which is usually a far more Aggressive and less pleasant version of the people who call you before you get to that stage or it, and this is more common because credit card companies don't like having these very aggressive practices. Your debt can be sold to a third-party company. Some kind of debt collection agency and that's when you get the very, very nasty sort of lots of ringing all the time and people turning up to your doorstep and trying to pretend they're, bayless and all kinds of other stuff that you really never ever want to. Go and encounter so please do whatever you can to never get yourself to that position because it can get really nasty.

I know a lot of people will advise people to go down that route, because you can write off your debts and all manner of other recommendations. I'm not a financial advisor, so i can't tell you what to do because i don't know your circumstances. But if somebody used to ask me, i would say, never ever get there, because the emotional stress the six years of not being able to qualify for any credit and a bunch of other negative issues that come out of it are just not worth it now. Let's get to the good bit of this video, which are the benefits of using a credit card.

Why do you have to go and use a credit card? Why can't you just continue using a debit card? What's the point, why go through all of this difficulty with having to make direct debits and balances and managing your limits and blah blah blah all that now really really simply, there are a small number of benefits that i think are quite important number one you can Go and separate your spending from the account where you essentially retain the bulk of your money. That's not invested in other things, and that, i think, is a really good thing. It helps protect against fraud, so you don't go and essentially give the details of the debit card that potentially has a much larger amount of money than your credit limit on a credit card. So you prevent yourself from being defrauded of that money.

That's a really useful thing, and also just it's good practice to go and separate your everyday spending where you're shoving your credit card into every kind of machine, and you don't know exactly who has access to what information etc on there. It's just good to go and separate those two things. In my opinion, the second big benefit is section 75 protection. Now in the u.s, this doesn't exist in in the u.s law.

There is a slightly different thing where a lot of major credit card providers offer something very similar that doesn't work in quite the same way. But in the uk there is a a law called the consumer credit act that was passed in the 1970s and that allows you to have protections under it, because the credit card company is equally liable for any purchase that you make in terms of the service provided And or or the goods quality. So, although there are some important things to note about how you claim and things that are eligible and not i'm going to go into the depths of, if you make a purchase of between 100 pounds and 30 000 pounds and you went and made a purchase of - Let's say a kitchen where you use a credit card for at least part of the purchase, then you will be protected for up to the full amount. If, let's say the company, you bought it from when bankrupt, as can happen, or let's say you went and bought some very expensive item like a laptop, for example, from a retailer and it arrives damaged, and the company does not want to have anything to do with You they refuse to reply to your emails.

They tell you you're not going to get a refund. You can then again go to your credit card company and get the refund full of full amount as well. Credit cards also offer you a bunch of perks so, depending on the types of credit cards that you have, you might be able to get some kind of lounge access or access to credit scores for free that otherwise you'll have to pay for or other random perks And benefits every credit card has slightly different ones and in some cases you might be able to get some kind of loyalty points or cash back as a form of rewards for using the credit card as well, which is basically like having free money for just using A different piece of plastic instead of using your debit card. The last thing that i think is really overlooked is the fact that a credit card does allow you, if you really need it, and it is a very expensive way of doing it, and i know that it's probably a bad idea in some cases, but it does Allow you the option of borrowing money in an emergency.

Should you need it? So if you very urgently need money right now, let's say it's a sunday and your boiler just broke and you need somebody to come out and fix it right there and then because it's february and it's freezing - and you know your children are going to get really Cold in the night, if you are in that position and just don't have the funds to go and pay and the plumber wants to go and have a prepayment or something like that or they need payment right there and then, when they're going to come out as An emergency, if you have a credit card, you do have the ability to make that payment. Even if you don't have the funds right there and then you then have that period of say, 30 to 56 days or whatever to go and repay it in full. If you find the funds somewhere else, maybe if you do have to borrow, you can borrow them somewhere else at a cheaper rate and you'll pay your credit card and you won't have to pay any interest whatsoever, which is which is great. But even if you do have to borrow for one or two months, that's still a better position to be in.

If you really need to have that emergency amount of money - and you don't have an emergency fund saved up for that purpose. Now i went through a bunch of stuff in this video. I probably missed out some really critical and important things. If i have i apologize and hopefully i'll be able to make a better video in the future, where i cover those as well.

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One of my videos comes out as well. Thank you so much for watching hey. I really really appreciate it if you manage to get this far in this video with that amount of stuff that i tried to squeeze into it. Thank you.

Thank you. So much and i'll see you guys later. You.