Credit Cards
Credit cards come from many different providers in today's multi financial service world, and of course they all come with lots of different benefits and pit falls.
Different from a debit card (which takes payment direct from your bank account) or from charge cards (which requires payment in full at the end of the month) a credit card does not require full repayment at the end of the month.
Credit cards are basically revolving credit facilities, which allows the named holder of the credit card to spend upto a certain amount of money, and then pay it off either in one go at the end of the month, or to make a minimum payment and then clear the balance over time. Leaving a balance on a credit card after the end of the month means that the credit card provider will charge interest on the amount owed.
Credit cards are now issued by many different providers, gone are the days when a credit card was only avaliable from your bank account provider. In today's global financial culture supermarkets, websites, airlines, Universities and football clubs to name but a few now offer credit card facilities.
Selling points for credit cards also varies, finding the right credit card for the user becomes more and more complicated when you look at just a handful of the different options below avaliable to cardholders:
- 0% Balance transfer fees with some
- Cash back avaliable on some credit cards
- Different APR interest rates
- Number of stores accepting the card provider
- Commision free fee on international transactions
- Cover against fraud
- Reward points
- Annual fee or no annual credit card fee
- Airmiles, shopping vouchers or money off related products
- Charity donations
A staggering array of different options exist and more and more are added each day.
Most credit cards also offer users the ability to withdraw money from a cash machine as a kind of cash advance, most credit card companies will charge interest straight away on cash taken from cashmachines on a credit card. So be careful and make sure you know the charges before using this kind of facility.
One of the massive benefits of Credit Cards in the United Kingdom is the increased amount of fraud and defect protection users get both online and offline, for purchases over £100. In the UK the credit card bank is jointly liable with the merchant for purchases of defective products over £100.
If used correctly credit cards can be a great benefit to consumers. By used correctly we mean, paid off in full at the end of the month to avoid any interest charges. By using a credit card to spend during the month, consumers money can be sitting in a savings bank account earning interest (making money work for the consumer) and as long as the balance is cleared at the end of the month no charges will normally apply.
Of course if credit card users don't clear the balance at the end of the month, then interest charges apply and these can soon add up. You hear lot's of dread stories in the media about credit card users getting into lot's of debt for spending more than they can afford to repay.
It would seem the best way to use a credit card is to pay 100% back at the end of the mont, and NEVER spend more than you can afford on your credit card facility.
