by: Phil Edwards
What is a credit card?
A credit card is a card that allows you to borrow money to pay for things. There will be a limit to how much you can spend called your credit limit. At the end of each month you can either pay off the whole of the amount you owe or make a minimum repayment.
Other kinds of cards include:
Do you need a credit card?
Using a credit card is a useful way of making purchases:
How do you choose a credit card?
The main two UK credit card issuers are Visa and Mastercard. These are accepted in most places and in 130 countries worldwide. Beware of less well known brands that may not be accepted everywhere.
Before you choose which credit card is the best for you, remember to read the terms and conditions carefully. Never sign up for a credit card without fully understanding what you are agreeing to.
Remember that all the plus factors will be prominently displayed in large print.
You may have to study the small print carefully to discover if there are any negative factors.
What You Need To Consider:
This is the rate of interest that you will pay on any outstanding balance.
You may be offered a low or 0% rate of interest for a limited time (Up to 6 months) when you sign up for a new card. A higher rate of interest may be charged for cash withdrawals.
Card issuers may offer you a lower rate of interest if your swap your balance from another credit card to theirs.
Remember to check when interest payments will begin. Will you pay interest from the day of the purchase? Or will you have a number of days interest free before you begin to pay? There is usually no interest free period for cash withdrawals.
Some cards over points or rewards for every pound spent on the credit card. Make sure that these are appropriate for you. For example, there’s no use collecting airmiles if you never fly.
Remember to check what the minimum monthly repayment will be. If you borrow £1000 on your credit card the monthly minimum repayment will probably be in the region of £25. But if you only pay this amount each month it will take a long time to pay off the balance and cost a lot in total when you include the interest payments.
This is the fee that the issuer will charge you every year for using their credit card. Not all credit cards have an annual fee, so remember to consider this when you are choosing which one is right for you.
There will be an extra charge, as well as the interest owed, if your payment is late. This charge may even be more than the amount you owe so be very careful to check what the charge is, and to ensure that all your payments are made on time. A good way of doing this is to set up a direct debit from your current account.
You may also be charged a fee if you exceed your credit limit.
Will Your Application Be Accepted?
Whether or not your application is successful will depend on your credit rating. Your credit rating depends on your credit history (a record of your use of credit) and is based on the record of your ability to repay debt.
You can obtain a copy of your credit file by contacting a credit reference agency. There may be a small fee for this service.
When your application has been accepted you will be given a credit limit. The credit limit will be fixed when you first apply for your card (although you can ask for it to be increased or decreased later) and the limit, including the amount you have left available to spend, will be shown on your monthly statement.
Insurances and Protection.
What You Can Do:
What The Issuer Will Do
Important Points To Remember:
For the summary details of the latest offers on UK credit cards please visit http://www.1st-uk-credit-cards.co.uk/