Shopping around for Credit Cards

23/11/2009

Shopping around for Credit Cards

Borrowing money used to mean a lump of cash from the bank, but plastic now dominates the lending market, with credit cards one of the most common types of loan on the planet. Most adults own a credit card of some sort, but deciding which one is right for you may be tricky, particularly if you are new to them or are changing to a new provider after sticking with the same one for a long period.

Typically a credit card is potentially free short-term borrowing, provided you settle the balance in full by the date shown the statement. On the other hand, normally you start to rack up interest if you can't repay the balance in full each month. This is where the rate itself may be very important, and they tend to vary. If you don't expect to be able to clear your balance regularly, you may be better off looking for a card which has a particularly low rate of interest.

Beyond this main drawback of interest, credit cards do tend to have some other advantages. They are a safe and simple way of paying for things at home and abroad, and may be especially useful if you are paying for something over the Internet or over the phone.

Another very handy element is the 1974 Consumer Credit Act. Section 75 of this means card issuers and retailers hold responsibility for purchases of faulty goods. If you buy something with a credit card which has a value of £100 to £30,000, which later turns out to be faulty or which you don't get because, for example, the company goes under, you can typically apply from a refund from the card issuer.

Other potential benefits with some cards include incentives for using them, like cash back all loyalty points which may be spent elsewhere. Furthermore, credit cards are accepted in countries across the world, meaning they are truly a travelling wallet.

As a form of borrowing, cards may be denied to people who have particularly poor lending histories. For example, those who have been made bankrupt in the past or who already own a considerable amount of money and are behind with payments may struggle to get approval. Card companies may take a dim view of people who have racked up considerable card debt with a number of providers over time, and you may also be denied if you have considerable outstanding balances on a number of other cards.

There are various ways of using a credit card, from buying things, to transferring debt to another card, and taking money out of cash machines. Different rates of interest tend to be charged for these actions.

Moving a debt over from one card to another is known as a balance transfer, and you may temporarily get zero per cent interest with the new provider, although they may charge you a fee for moving the cash over. You may incur significant fees for withdrawing from a cash machine, and it may be worth checking out the fees of a provider before opting for one of their credit cards.

Other news articles you may be interested in...