Credit Card Advice & Info

Credit Cards Basics

With the UK moving away from cheques and even cash, credit cards are a necessity for most people. But for someone wanting their first credit card, or wanting to get a better deal it can be a minefield. read more: Credit Cards UK

Credit Score and Credit Cards

Let's face it, credit cards are a necessity. It helps us have to carry less cash in our pockets, and also allows us to spread the cost of major purchases over a period of time. read more: Credit Scoring

Prepaid Credit Cards

Prepaid credit or debit cards are getting more and more popular. Whether it is because you have a bad credit history so are unable to get a credit card, do not meet the new tighter requirements to get a credit card ... read more: Prepaid Credit Cards

Reward Cards

With such a variety of credit cards available, some credit card providers wanting to stand out from the crowd are offering what are called reward cards. read more: Reward Cards

Bad Credit Cards

More and more people through no fault of their own find themselves with a bad credit rating. They may have been redundant, suffered an accident, been ill, overstretched themselves. read more: Bad Credit Cards

Credit Cards Basics

With the UK moving away from cheques and even cash, credit cards are a necessity for most people.

But for someone wanting their first credit card, or wanting to get a better deal it can be a minefield. Along with different interest rates, credit card companies often make the process of understanding all the ins and outs of their specific credit card confusing. It's actually got a name, confusion marketing.

Credit Cards

Here are the basics you want to understand before starting your credit card hunt.

Credit Card Interest

Generally if you pay off all of your spending when you get your monthly statement you don't pay any interest. So in effect you got to use your card for nothing.

The only exception may be for cash advances. This is when you draw cash off your credit card. Different companies have different rules, but generally the interest rate for cash advances is higher than for normal spending. Also, interest is added to your account straight away whether or not you pay the full balance by the due date. As well as the interest, some companies charge a handling fee for withdrawing cash.

If you don't pay off all your spending when you get your statement, you will start to be charged interest. The interest rate will be the one that was stated when you were accepted for the card. Companies do change interest rates but have to give you 60 days notice.

Most people set up a regular monthly payment. This can be a set amount, or the minimum required to service the agreement.

If you do not completely clear what's on your card, the credit card company will use your payments to clear the most expensive debts off first. The absolute minimum as of April 2011 is one percent of the debt plus any interest and charges.

Always pay off as much as you can. By only paying the minimum you are in danger of never pay it off, as the interest may grow faster than the rate you are paying off the debt. There are various credit card repayment calculators on the internet that you can use to see what difference altering your monthly payment can make.

Using Your Credit Card Abroad

It really pays to shop around if you plan to use your credit card abroad regularly. It might even be worth getting one card just for that purpose. The reason is that most credit card companies will charge you a commission for using your card abroad. Also, if you withdraw cash abroad you will also be charged a foreign transaction fee.

There are a few credit companies that offer specific cards for holidays and have better deals. Visit a site like moneysavingexpert.com that has some excellent tools to help you choose the right card.

It's also a good idea just to advise your card provider that you are planning a holiday. With card cloning and identity theft on the increase, if you do not normally go abroad your provider may be suspicious when you first come to use it and block it.

Credit Card Cheques

Several years ago it used to be common practice for credit card companies to send "cheques" out. These could be used exactly like normal cheques to pay for goods or services.

As I write, this practice has been made illegal. Saying that, you are still entitled to ask for some if you need them. Why would you need a credit card cheque? It may be that you want to buy an expensive item but the seller does not accept credit cards (could be a private seller for example).

It's important to check though what charges a credit card cheque will incur, as they are often higher than for a normal transaction.

Credit Card Balance Transfers

This is when you transfer you debt to another credit card company. With credit card companies always competing for new customers they regularly offer no interest balance transfer deals. These deals will last 6, 10 or perhaps 12 months. The benefit is obvious, as instead of paying interest, you can pay more of your debt off. This can be a great way of paying off a balance much quicker.

Check with your current provider first though as there may be a charge for transferring away, which may be more than any savings you might get.

Credit Cards - Late & Missed Payments

Each month you will automatically be sent a statement. This will confirm your spending, minimum payment required and payment due date. If you pay by standing order, as long as there are funds in your bank account nothing should go wrong.

If you are late with a payment, or miss a payment though, that will incur you extra charges and fees and may also be recorded on a credit scoring report.

Charges should not be more than £12 - and remember that this gets added to your debt so you'll end up paying interest on that as well.

If you know that you are going to be late with a payment or unable to meet a payment, contact your provider straightaway. If you have an account in good standing, it may be that you can come to an arrangement and avoid the charge. Even if you can't, it still shows the provider that you are taking action. The worst thing you can do is just to avoid the situation.

If you regularly are finding it difficult to meet your payments, as well as contacting your provider contact one of the free debt counselling services (you should NEVER have to pay for advice) such as the CCCS.

Credit Card Insurance

With all the bad press about PPI (Payment Protection Insurance), you'd think it was a bad thing. It isn't. The problem was that people were mis-sold it, not that the concept of PPI itself is bad.

There are two different types of credit card insurance:

Insurance to cover the loss and misuse of the card.
This insurance covers all your credit cards, debit cards as well as other important documentation such as your passport, driving licence etc. You list all these with the card insurance provider. Should you lose one of these items, you phone them and they contact the necessary companies. Nevertheless, you should always phone your credit card provider yourself if you lose your card.
Insurance to cover the repayment of the card if you become unable to service the debt.

This kind of insurance covers your repayments should for a range of reasons you become unable to cover your repayments (illness, unemployment). All these policies have strict requirements and you should be 100% certain that you would be eligible.

Please follow the links below for more information on credit cards

Credit Card Advice & Info