CREDIT CARDS
What is a credit card?
Rates and Fees
Repayment Options
Deciding Which Card
Can you change cards, even if you have big debts?
If Things Go Wrong
WHAT IS A CREDIT CARD?
Credit cards are a convenient method of obtaining credit. They are
available from all major lenders and provide flexibility for the
consumer.
They are international and can be used all over the world, whenever
you see the logo on your card. Credit cards can provide you with
instant access to cash (for which there is probably a fee payable).
Goods can be bought quickly
and easily in person, over the phone, or on line. Some companies
offer insurance on your purchases and can protect your goods in
the event o floss or theft. They can also provide you with travel
insurance.
Cards tend though to be expensive
and can be hard to control. It’s advisable to keep your receipts
of purchases made. Mistakes do happen and you should cross check
your receipts with your monthly statement. Any discrepancies should
be reported immediately to the company. Other forms of borrowing
can prove cheaper - a personal loan or extension of your existing
mortgage.
These options should be considered
before applying for a credit card. Remember purchases made abroad
may not appear on your statement for a few months and it is therefore
difficult to determine whether they have been debited to your account.
RATES AND FEES
Credit cards attract annual fees and interest charges. Interest
rates tend to be high and vary between companies. Some companies
provide interest free periods. Other companies have penalty payments
for late or returned payments or if you exceed your credit limit.
REPAYMENT OPTIONS
Most credit card companies insist on you repaying the minimum repayment.
This can be found on your monthly statement. Alternatively they
request that you repay a percentage of the outstanding balance -
3-5% for example.
DECIDING WHICH CARD
You will need to assess how you use the card. If you use the card
for convenience shopping and would want to repay the full balance
at the end of the month, then cards that offer a long interest free
period with no annual fee could be better for you.
If you use the
card for ongoing borrowing and intend to pay off the minimum amount
every month, then a shorter interest free period with lower rates
might be the one for you.
If you travel frequently, it may be worth
considering a card which allows you to pay your bills via direct
debit.Some companies offer 100 days protection against goods purchased.
This can include damage, loss or theft, but should look at what
each company offers.You should also memorise you PIN (Personal
Identification
Number). Note also the card number, and issuers details and keep
them separate from your PIN.
In the event of loss or theft, you
can easily contact the credit card company to stop your card. Protection
is also offered from the company by registering your card with
them
for a small annual fee. In the event of loss or theft, the company
will sort out matters for you, providing you with a replacement
card. Some companies also offer insurance against loss, theft or
misuse of the card.
CAN
YOU CHANGE CARDS, EVEN IF YOU HAVE BIG DEBTS?
Yes. By moving your Christmas debts to a lower-charging card,
for example, you could save yourself a lot of money. Be careful
though; these low rates are often only for transferred balances,
not for new purchases. If you make purchases with the new card,
you will be charged at the higher rate. Any repayments you make
will then go towards paying off the new debt first.
IF THINGS GO WRONG
If you are unable to meet your monthly repayments and are struggling
to repay your outstanding balance, contact the credit card company
immediately. The earlier you approach them,
the more sympathetic they will be to your situation. Alternatively
seek advice from an alternative credit card company which offers
lower rates and fees.
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