When Barclaycard was launched in 1966, it was the UK's only credit card. Actually, initially it operated like a charge card so the bill had to be paid off in full every month and the maximum credit limit was a mere £100. How times have changed.

Let's face it. Credit cards are a jolly convenient way of handling cash flow and there's the added bonus that you can get up to 59 days of borrowing interest-free. But there are other benefits too.

When you apply for a credit card, the two main sources of information that lenders use when deciding whether to grant you credit are the personal details you supply on your application form and the information held on you by the credit reference agencies.

Whenever you make any kind of application to borrow money, lenders will invariably check your financial credentials with their chosen credit reference agency to see whether you are a good or bad credit risk.

Having a bad credit history doesn't exclude you from getting a credit card but you may have to pay substantially more for your plastic.

By using your card, you can defer payment for goods and services for up to two months, without paying any interest at all. But to do this, unless you are taking advantage of a longer-term interest-free credit card you must pay off your entire balance each and every month; otherwise interest will start clocking up at an alarming rate.

An equally important source of income for credit card issuers is Credit Card Repayment Protection (CCRP), which they will try and flog to you every time you take out a new card. This is an entirely optional insurance policy that meets your monthly repayments if you are unable to work because of accident, sickness or unemployment.

Credit cards and store cards are issued by banks and other financial institutions who are members of international payment organisations such as MasterCard and Visa. They allow you to purchase goods and services on credit, up to a pre-arranged spending limit. The balance can be paid in full each month or you can decide to make smaller payments.

Used wisely, a credit card can be the answer to cash flow crises. If you pay back the amount you borrow before the monthly typical Annual Percentage Rate (APR) kicks in, you can neatly dodge interest charges. The amount of time it takes for the interest charge or typical APR to kick in varies from card to card. Typically it ranges from 28 days to 56 days.

Some providers offer a 0% rate for up to 12 months. But be careful, you may get stung with a high typical rate after the introductory period. Plus, the 0% offer may apply only to balance transfers. So, if you flash your new ‘interest free’ card, you could be in for a nasty surprise when the bill arrives.