Things to look for when choosing Credit Cards.

17/10/2009

Things to look for when choosing Credit Cards.

Most adults at some point in the UK may have a credit card, and some may run more than one at once. The obvious attraction of using credit cards is the fact that you can spend money on them but pay it back later, often in instalments although typically you may have to pay interest until the balance is cleared.



Normally you may find you are given a credit limit which is the maximum amount you can spend on the card. This is normally anything between £500 and £10,000 and how much you get depends on your credit rating. Your rating may be defined by a number of factors from how good you have been in the past at paying back other debts to your current financial circumstances, ie how much you earn.



Some people who have had county court judgements or 'CCJs' made against them or who are significantly in debt already with a number of other providers may struggle to get approval for a new credit card.



Some credit card companies charge an annual fee, but normally firms make their money through the interest that runs up on the amount of cash you have borrowed. Often the cards that charge annual fees are 'platinum' or 'exclusive'- style credit cards.



Other things which may be worth bearing in mind when looking for cards include;



  Interest free periods

These are periods during which you incur no interest on the purchase provided you pay off within the time specified. This may be as long as 59 days.



* Penalty fees

These are usually incurred when you are late paying an amount off your balance or if you go over your credit limit.



* Introductory offers

These may include zero percent interest on purchases for an extended period, meaning you don't pay any interest at all, potentially for months on end.



* Balance transfers

This involves moving your debt on one card over to another with a new provider - sometimes you may get zero percent interest on the balance you transfer over for a period, although the new provider may charge you a one off fee for moving the cash over between the credit cards.

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