We sum up the best reasons for having a credit card, from the practical issues of not needing cash to the financial benefits when managing your money.

1. Convenience

Having a credit card avoids you having to carry around cash. Of course, you might still need to carry a few pieces of loose change but you no longer need to lug around bundles of notes with you.

Carrying around actual cash also increases your risk of it being stolen or simply losing it. How many people do you know who’ve either had their wallet or purse stolen or just dropped it somewhere? At least with credit cards, you can just call the company, cancel it and get a replacement.

With a credit card you no longer have to visit the ATM. You can avoid having to touch those bacteria infested keypads and the possibility of some suspicious person looking over your shoulder ready to do who knows what.

Credit cards are also universally accepted methods of payment. Pretty much any hotel around the world, high street shop, restaurant or online business will accept credit cards as payment.

2. Build up your credit score

Having a good credit history puts you in a much better position to be accepted for borrowing money in the future.

When you apply to any regulated and reputable lender for a loan or mortgage, the provider will almost certainly check your credit score and credit history. This report will show the lender how well you have managed your finances in the past as well as your current liabilities. Having either a poor credit history or very little credit history, means you are less likely to be accepted by the lender.

By using your credit card to make purchases and paying off the full amount each month, you start to build up a good, solid history of managing your money. This gets reflected in your credit score and ultimately stands you in a better position to make a successful application when asking your bank or mortgage provider for money.

Credit card providers themselves will do a credit score check to ensure you are suitable for their product and to gauge the amount of credit limit you are allowed. To counter this problem, look for special credit building credit cards that are designed to help people build up a good credit history over time. These cards generally attract a much higher rate of interest but as long as you repay the full amount each month, you can avoid hefty interest charges and in the process, boost your credit score.

3. Get rewarded

Certain credit cards give you rewards and points every time you shop and buy something when using the card. These are known as rewards credit cards.

The kind of rewards on offer range from discounts and vouchers to getting extra points such as Nectar points or Air Miles that can be redeemed for money off your shopping or tickets.

Generally, you can keep track of your rewards online via the provider’s website or app. Some rewards may have an expiry date so it’s worth keeping an eye on what you have built up.

4. Get cash

Yes it’s true. Some credit cards actually give you hard cash each time you spend using the card. These are known as cashback credit cards.

The amount of money you earn is usually a percentage of the amount you spend. This cashback money is then credited to your credit card account on a regular basis, often monthly.

Look out for cashback cards that offer introductory rates. These deals usually involve giving you an extra percentage amount of cashback for a set period of time before reverting to the normal cashback terms.

5. Taking advantage of 0% balance transfer

If you have an existing credit card debt that you are paying interest on, then you may be able to transfer this amount to a new card with a new provider at 0% interest for a set period of time. These cards are known as balance transfer credit cards.

Credit card debt can be crippling to your finances and interest charges can build up quickly. One of the ways that balance transfer cards may help is to avoid you having to pay hefty interest rate amounts. Balance transfer offers last for a limited amount of time for example 12 months, 18 months or longer. During this period you will avoid paying interest on your outstanding amount, provided you maintain regular repayments.

However, ensure that you repay the full amount of your debt before the end of the 0% offer period, as you will immediately start paying interest again when it finishes.

6. Spreading the cost of big-ticket items

If you’re looking to spread the cost of a large purchase such as an expensive TV, electrical appliance or item of furniture, then consider a 0% purchase credit card.

These cards offer a 0% interest rate on new purchases for a limited amount of time such as 12 month or 24 months. This means you can spread the cost of buying the item over this period without incurring any interest rate charges, as long as you keep up the required monthly repayments.

However, you need to ensure that you fully repay the amount before the 0% period ends, as you will immediately start paying interest on the outstanding debt.

7. Credit card protection

Within the Consumer Credit Act of 1974, there is something called Section 75. Essentially, this gives the consumer extra protection when purchasing goods and services with a credit card.

This is very useful for situations where perhaps the goods you bought are faulty, are not as described or are simply not delivered. It means that both the company selling to you and the credit card company are liable for compensating you. It covers purchases that have a total value of between £100 and £30,000 and where payment was made either in full or part using a credit card.

To make a claim you should contact your credit card company stating that it is a claim under Section 75 of the Consumer Credit Act.