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0% APR Credit Cards: How Can They Do That?
During the days when the federal bank interest rates were at its
lowest, back in 2002 and 2003 to be specific, countless credit
card providers offered 0% APR credit cards to many consumers.
Needing only to pay the outstanding balance, smart...
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Did you know that credit card merchant account services could
possibly multiply your sales receipts within a matter of weeks
or months? Of course, other factors will play a role in the
overall success of this strategy, but many company owners...
Credit Education
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Selecting the Right Credit Card
Not all credit cards are created equal. There are many various
types of credit cards, and if you are looking to apply for a
credit card, it may be difficult to decide which type of card is
best for you.
In this article, we will look at...
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What You Need To Know About Credit Cards
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:
- A cheque guarantee card, issued by your bank, that you can use to ensure that your cheque will be honoured up to a certain limit.
- A charge card where you have to repay the full amount at the end of each month.
- A debit card, issued by your bank, where whatever you spend is immediately deducted from your bank account
Do you need a credit card?
Using a credit card is a useful way of making purchases:
- A credit card means you don’t need to carry huge amounts of cash around and risk losing it.
- A credit card means you can buy items over the internet.
- A credit card means you can make purchases abroad without having to worry about local currency.
- A credit card gives the opportunity to spread the cost of a large payment over several months.
- A credit card is useful in an emergency, for example, an unexpected repair to your house or car.
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:
- APR (Annual Percentage Rate)
This is the rate of interest that you will pay on any outstanding balance.
- Special Introductory Rates
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.
- Balance Transfer Rate
Card issuers may offer you a lower rate of interest if your swap your balance from another credit card to theirs.
- Interest Free period
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.
- Cashback and Rewards
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.
- Minimum Repayment
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.
- Annual Fees
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.
- Late Payments
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.
- Exceeding Your Limit
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:
- Take good care of your credit card to ensure that it isn’t lost or stolen.
- To prevent misuse of your card you must report any loss or theft of your card to the issuer immediately. Many issuers allow you to register all your cards with them so that in the event of you losing a purse, handbag or wallet they can all be cancelled with just one phone call.
- You must keep all your receipts and also check your statement carefully and report any suspicious transactions, for example payments that you have no record of making.
- Credit card companies are now issuing cards with PIN (Personal identification numbers) which are known as Chip and PIN cards. Rather than signing your name you will be asked to enter your PIN onto a keypad. You must ensure that you keep this number secret.
What The Issuer Will Do
- The issuer should insure you against loss, misuse or theft of your card.
- The issuer may also insure your purchases for up to 100 days.
- Your issuer may also provide protection against you being sold unsuitable or shoddy goods.
Important Points To Remember:
- Credit cards can be a very useful tool to help you to manage your finances.
- Choose your card carefully, remembering to read and understand all the terms and conditions before you sign up.
- Remember to set yourself a budget and decide how much you will pay off each month.
- Check your statements carefully each month.
- Look after your card to prevent it being lost or stolen.
For the summary details of the latest offers on UK credit cards please visit http://www.1st-uk-credit-cards.co.uk/
Phil Edwards is a Business analyst in the city of London, freelance writer for several finance magazines and websites and co-owner of http://www.1st-uk-credit-cards.co.uk and http://www.1st-uk-bank-accounts.co.uk.
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Credit Reports - Credit Cards - Car Loans - Home Loans - Credit.com |
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Equifax Personal Solutions: Credit Reports, Credit Scores ... |
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The FTC's web site on Credit |
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Federal Trade Commission - Consumer Credit Center |
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AnnualCreditReport |
Site set up by the big three credit reporting agencies in the United States, to furnish free annual credit reports, as required by federal law. |
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Credit referencing and consumer targeting for the USA and other countries. |
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National Credit Union Administration - Home Page |
An independent federal agency that supervises and insures 7152 federal credit unions and insures 4240 state-chartered credit unions. |
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Credit - Wikipedia, the free encyclopedia |
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Credit (finance) - Wikipedia, the free encyclopedia |
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The National Foundation for Credit Counseling |
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Ford Credit - Auto financing for Ford, Lincoln and Mercury cars ... |
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The Credit Card Prank |
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Credit magazine, corporate bonds, derivatives, structured credit ... |
Credit magazine provides information on the international credit markets for credit investors, issuers and market professionals. |
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CUNA: The Credit Union National Association |
News and resource directory about credit unions. |
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Credit/Debt Management - Tools and Advice for Managing Credit and Debt |
Drowning in debt? Trying to improve your credit score? This is the place for you. Get real world information and tips, as well as the legal low down, ... |
credit.about.com |
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