Is the John Lewis Credit Card good?

You can use the John Lewis Credit Card for a range of everyday purchases such as dining out, buying new clothes, booking holidays and similar. Credit cards are much easier to carry around than cash, you can use them quickly and easily, and most places now accept credit cards. You won’t find many places now which won’t accept your John Lewis Credit Card.

Other benefits of using a credit card are that they are handy to have if you need to suddenly deal with an emergency, such as paying for your vehicle breakdown and the cost of towing it to the nearest garage. If you don’t have access to a credit card, and you are short of funds, it may be impossible to cover these repairs.

You shouldn’t just apply for the John Lewis Credit Card, you should take some time to consider your options and determine whether or not this is really a good idea for you, or if there may be other options which are better for your own circumstances.

In this article we will look at the following:

  • The reasons why it might not be the best option for you.
  • The benefits and downsides of having a credit card.
  • Other options you may want to try, instead of credit cards.
  • Top tips for taking control of your credit card, and deciding whether you should go ahead with this option.

What is the John Lewis Credit Card?

John Lewis offers a credit card that comes with various reward options. Their Partnership Card offers interest-free credit for nine months as well as the ability to earn points for a repurchase you do specific store. The company is a registered letter in the UK and is a trading name of John Lewis PLC.

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Top reasons why a John Lewis Credit Card may not be a good choice

There are a lot of young people today who are trying to get their first credit card, and it is highly likely that they will already be leaving college or university with a lot of debt. In the form of student loans and others.

In may not come as a surprise (especially if you have been a student yourself) that student loans are getting worse than other debts, including credit cards. This means that a lot of students are relying on credit cards just to pay to day expenses, such as food and bills.

There are many people who are in a position were they are paying back their student loans for years, directly from their salary each month. In most cases, it doesn’t make any sense to have credit card bills to pay back on top of the student loans and other debt.

Trying to budget

There are many younger people who leave education and find themselves looking to kick start their career but want to gain some independence too.

They need to ensure their salary will cover their day to day expenses, including rent, council tax and others, such as cards, and household bills. It is not easy to do this when you also have debt to cover too.

In this situation, the John Lewis Credit Card may seem like an extremely attractive choice to pay for some of these things, but, while it seems like ‘free money’, this is only for a limited time. You will still need to pay these bills at the end of the month.

Too easy to overspend

If you are not the best at managing your finances, and there is the risk that that you may end up overspending, you could probably do without getting the John Lewis Credit Card, as this has the very likely potential of leading you to even more financial problems.

It is common knowledge that people are much more likely to overspend when using a credit card, as opposed to if they are paying by cash. You don’t see the money coming out your account, so it feels very different to paying by cash. Should you suspect that you will not be the best at curbing your spending, then you might not want to risk getting a credit card, as this could plunge you deeper into financial problems.

You are not earning enough to cover your credit card balance

One of the most efficient ways to use a credit card is to slowly build up your credit score. The best way to improve your score with a credit card is to use it to pay for everyday items, but you should always ensure you clear off your balance at the end of the month. Don’t just keep buying and buying with it, if you are not going to pay it off.

Getting a credit card is only really useful, if you are able to comfortably clear the credit card bill each month from your salary. However, if your earnings do not match your credit card expenditure though, you may end up getting into financial trouble.

If you only work part-time, you have a seasonal job which you fit in between your studies at university, or you do not have a job, you are probably not bringing in enough money to be able to afford to pay off your credit card balance when it is due each month.

How to pay your John Lewis Credit Card interest

If you don’t pay off the balance of your John Lewis Credit Card each month when it is due, you will end up facing more and more interest charges.

It is not ideal to end up with interest charges, on top of your payment, as it makes you feel like you are paying an excessive amount. Unfortunately, this is the downside of failing to manage your credit card properly.

The interest payments may just be seen as dead money. You are working just to pay the interest, when you could be spending this money on more enjoyable things.

If you consider the interest you might end up paying, you should carefully consider if getting a credit card will really be a positive investment. Will you be able to pay the balance? or is this taking you down a path to further financial problems.

John Lewis Credit Card – the good and the bad

With so many people owning a credit card these days, it is no wonder that the common opinion is that you can’t really survive without one. If other people have one, why shouldn’t you? Credit cards are almost a staple item these days, and in some cases, they may signify your financial health. If your main aim is to build up your credit score to help you secure mortgages, loans etc, then a credit card may seem like the most appealing option.

There is no doubt that The John Lewis Credit Card is an extremely helpful option in many situations, but you need to take some time to understand whether or not this will be the right choice for you. It won’t necessarily be the right option for everyone.

These are some of the pros and cons of taking out a credit card:

  • Pro: The John Lewis Credit Card is the best way to build up my credit: It is true that the credit card can help you build up your credit. It only does this when you manage it correctly though. If you can use your credit card in a way where you purchase goods and services and ensure you pay off the whole balance each month (not just the minimum payment), it will do wonders for your credit rating.
  • Con: I will end up with high interest payments: If you are not able to completely clear off the balance of your John Lewis Credit Card balance when it is due each month, you will end up being charge interest on the debt. Interest ratings can build up to the point where it negatively affects your credit score. In short, it does more damage than good.
  • Pro: A credit card will allow me to rent a car: It can sometimes be difficult to rent a car, if you don’t have a credit card. Many car rental companies will only accept customers with a credit card. However, this isn’t really a significant reason to get one, as many companies will also accept debit cards. You may just need to do a bit more digging to find them!
  • Con: It can be easy to forget to clear the balance: If you are busy or on holiday, you may completely forget to clear off your John Lewis Credit Card balance before your next payment is due. This means that you will not only have the balance to clear off, but also the added interest.
  • Pro: It is handy for an emergency: We can’t always prepare for what may be around the corner, and a credit card can be handy in a time of emergency. If your car breaks down, for instance, or you need to travel suddenly, a credit card can be a godsend.
  • Con: It can be more expensive: Of course, it would be much better to plan for emergencies by saving some money from your pay each month, but this isn’t always possible. This can be much more affordable, as you don’t have the interest rates or charges to deal with.
  • Pro: I can earn rewards: There are many credit card companies who offer you incentives, such as rewards and discounts at your favourite stores. This should not be a reason to get a credit card, but it can be a good addition.
  • Con: There are risks involved: Of course, the rewards can be tempting, but if you are taking the credit card, just to get rewards, but you can’t make payments, it defeats the purpose and could end up damaging your credit rating even further.

What else you need to know about reward cards

Credit card merchants know how to pull your strings. They are well aware that by offering rewards that people want, most will want to snap the deals up and, in the long run, will end up spending more money on their cards than they would without the incentives. For instance, if you get a reward for spending over £50, you’re more likely to spend a bit more to get it.

Credit merchants are also well aware that most people do not pay off the balance of their credit cards every month. This is, after all, how they make their money. If you don’t pay off the balance, you pay interest, which is more money in their pockets.

Credit card companies also tend to have good deals with the reward suppliers. So, although it seems like they are being generous, they are really not being as generous as you think! Not only are you paying for the reward (and then some!), they are getting it a fraction of the cost.

How to manage the John Lewis Credit Card and reduce chances of facing debt issues

Your main focus for getting a John Lewis Credit Card should be to build up your credit score, as this is extremely important when trying to secure loans and getting access to better credit rates. If you always keep this in mind, you will be more likely to manage your credit card better. It will help you stay mindful of your spending.

Your credit score is comprised of a range of factors, including your credit history, and not having a credit history can be just as bad.

If you have a good credit score, you will be in a better position to be able to buy a home or a new car, get your home furnished or take an expensive holiday abroad when you want. However, in order to improve your credit score with your credit card, you will need to be able to manage it well.

These are some of the ways you can manage your credit card efficiently and get into good habits with managing your card.

  • You should try to keep the limit of your John Lewis Credit Card as low as possible. It is best to keep the limit as low as possible, especially if you are struggling to make payments. If you are asking if you want to accept a credit limit increase, you should refuse it, unless you are 100% sure you can pay it back each month.
  • Although it may be tempting to have several credit cards in your purse or wallet, this is not a good idea. You only need one credit card for your purchases. If you are juggling several credit cards, it could have an adverse effect on your credit score.
  • Aim to pay off your John Lewis Credit Card balance each month. In doing this, you will quickly build a good credit history. It shows future lenders that you are able to manage your finances well, which is highly appealing to lenders.
  • Don’t be tempted by the rewards. Many credit cards come with freebies such as discounts on your clothing purchases, food and useful gadgets. Of course, the thought of taking out a credit card if you are getting a PS4 as part of it sounds extremely tempting, but this is not really the way to deal with credit cards. You may find that another tempting reward pops up through a different lender, and then all you are doing is jumping around credit card companies.
  • Don’t end up maxing out your John Lewis Credit Card. You have a certain available credit, and if you use this all up, it will have a negative effect on your credit score. Try to use up to 30% of your available credit, if you want to build up your credit score.

Other options instead of the John Lewis Credit Card

If you are not 100% sure that this credit card is the right option for you, you may want to look at the other options available to you.

Another option you may want to consider is a ‘prepaid credit card’. A prepaid card is a good way to build up your credit score, without the other risks which are involved.

Prepaid credit cards

Prepaid cards are similar to credit cards, but you need to pre-load with funds to spend. Pre-paid cards can be used in the same places that accept regular credit cards, so you still have plenty of options when spending your money.

The prepaid cards have some of these benefits:

  • They are ideal for improving your credit score, but without the risk that comes with credit cards.
  • You can stick to a budget – no risk of overspending.
  • Easier than carrying cash around with you.
  • Safer option that carrying cash.
  • You can keep track of your money easily with a prepaid card.

If you are worried about giving out your credit card number when making purchases online, using a prepaid card can provide you with extra security.

Should you use a debit card?

If you have a bank account, then you will have a debit card. As a debit card is linked to your bank account, you can only spend money when there’s funds in your account. If you don’t have money, you can’t spend, so this diminishes any risk of overspending.

Debit cards can be used anywhere that credit cards are accepted. You may also want to consider a prepaid debit card which basically works in the same way as a prepaid credit card. These can be a good way to manage your finances better, and teach teenagers about spending and budgeting, if you desire.

Do you need a credit card to build up your credit score?

Although it may be hard to believe this, you can definitely live without a credit card. We live in a time when electronic payments are commonplace, and your debit card is just as effective as a credit card, but without the temptation and worry.

No matter what bills you have in your own name, including your rent, mortgage, bills, mobile phone and any other bill that has your name on it, you will be able to build up a good credit record, which will allow you to qualify for more credit. The key is to ensure you pay it all on time!

To conclude

When it comes to it, you don’t actually need the John Lewis Credit Card to build up your credit score. It will make it easier though, as your credit rating tends to improve relatively quickly, as long as you manage it well.

It is entirely possible for you to clear off your balance every month, and build up a good credit score, without the interest and other charges which come with making late payments!

References

CONC 13.1 Application

CONC 2.1 Application

CONC 5.2A Creditworthiness assessment

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