|
Copyright © 2005
Debt Advice Online
All Rights Reserved |
|
Debt & Financial Advice
Credit Card Options |
| |
| Credit cards are a convenient
method of obtaining credit. They are available from
all major lenders and provide flexibility for the
consumer. Some basic facts about credit cards are
set out below. |
| |
| Step
1 - Which Card? |
Standard
- Visa and MasterCard are two of the common credit
cards available.
Platinum and Gold
cards - these are usually available for
people with higher levels of income, and have benefits
attached to them.
Charity and Affinity
Cards - these operate in the same way as
standard credit cards but a small percentage of
what you spend is donated to the charity to which
the card is connected.
Loyalty
Cards - These cards tend to offer incentives
such as cash bonuses, Air Miles, points and other
discounts. |
| |
| Pros |
| Credit cards
are international and can be used all over the world,
wherever you see the logo on your card. Credit cards
can provide you with instant access to cash, (for
which there is usually a fee payable). Goods can
be purchased quickly and easily, in person, over
the phone, or on-line! Some companies offer insurance
on your purchases, and can protect your goods in
the event of loss or theft. They can also provide
you with travel insurance. |
| |
| Cons |
| Credit cards
are international and can be used all over the world,
wherever you see the logo on your card. Credit cards
can provide you with instant access to cash, (for
which there is usually a fee payable). Goods can
be purchased quickly and easily, in person, over
the phone, or on-line! Some companies offer insurance
on your purchases, and can protect your goods in
the event of loss or theft. They can also provide
you with travel insurance. |
| |
| Rates And Fees |
| Credit cards
attract annual fees and interest charges. Interest
rates tend to be high and vary between companies.
Some companies provide interest free periods. Other
companies have penalty payments for late or returned
payments or if you exceed your credit limit. |
| |
| Repayment Options |
| Most credit card
companies insist on you repaying the minimum repayment.
This can be found on your monthly statement. Alternatively,
they request that you repay a percentage of the
outstanding balance, for example, 3-5%. |
| |
| Deciding Which Card |
| In deciding which
card is the best for you, you will need to assess
how you use the card. For example, if you use the
card for convenience shopping and would want to
repay the full balance at the end of the month,
then cards that offer a long interest free period
with no annual fee could prove more appropriate.
If you use the card for ongoing borrowing, and intend
to pay off the minimum amount every month, then
a shorter interest free period with lower rates
might suit you better. If you travel frequently,
it may be worth considering a card, which allows
you to pay your bills via direct debit. |
| |
| Step
2 - How Do I Apply? |
| Application forms
are usually completed and submitted to the credit
card Company. A decision on whether or not you are
acceptable is given within a couple of days. Credit
card companies use Credit reference agencies in
determining your application. Credit reference agencies
provide a detailed analysis of your own financial
position. In particular any county court judgements,
electoral roll details and previous credit searches
made against you. If you are refused a credit card,
or wish to make enquiries concerning your own credit
file, you can apply to the credit reference agency
for your record. They will charge a small fee. Details
of how to apply will be provided by the credit card
Company. |
| |
| Step
3 - How Am I Protected? |
| As discussed
above, some companies offer 100 days protection
against goods purchased. This can include damage,
loss or theft but you should see what each company
offers. It is advisable to memorise your Personal
Identification Number (PIN). Note also, the card
number, and issuers details and keep them separate
from your PIN. In the event of loss or theft you
can therefore easily contact the credit card company
to "Stop" your card. Protection is also
offered from the company, by registering your card
with them. An annual fee is payable. In the event
of loss or theft, the company sorts matters out
for you, providing you with a replacement card.
Some companies also offer insurance against loss,
theft or misuse of your card. |
| back to top |
| |
|
|
