A credit card is a type of bank or payment card that allows you to borrow money from a provider to spend up to a certain credit limit and then pay it back in the future. There is a minimum amount that you must repay each month, and if you don’t pay off the full balance you will be charged interest on the amount outstanding. How much you are charged will depend on the card you are using.
A credit limit is the maximum amount of money you can borrow at any one time on your credit card. If you exceed this limit you may be charged a fee, your credit score could be affected, and/or you may lose a promotional rate of interest.
APR stands for Annual Percentage Rate and it represents how much it will cost you to borrow money. It’s calculated by considering your interest rate and any additional fees and charges on your account.
Unless you have a fixed rate on your credit card, (which are very hard to come by), your credit card provider could change interest rates at any time, so it is a good idea to stay on top of your balance.
Credit cards come with many different features that are useful for different purposes so initially you need to think about what you’ll be using the credit card for. If you want to transfer a balance to avoid interest payments, a 0% balance transfer card could work for you. However, if you are looking to make high value purchases, you might want to spread this cost with a 0% purchase card.
Compare-Credit-Cards provides you with the opportunity to see a list of credit cards with many different offers tailored to suit your needs.
Most card providers will offer a cooling off period for two weeks from when you receive your card, and you’ll have 30 days to pay off your balance. You can still end your credit agreement after the cooling off period and will need to repay your balance in full.
Your credit rating is a number that represents your creditworthiness to lenders. This is based on an analysis of your credit history (your history of borrowing and paying back credit). For example, the higher your score, the more likely you are to be accepted for future credit applications.
A soft credit search (sometimes known as ‘pre-screening’) is the easy and simple way of finding out which credit cards you are most likely to be accepted for without your credit score being affected. It is carried out by a provider to help them decide whether or not they may be able to issue you with a credit card. Unlike a “hard” credit search, a soft search is recorded on your credit file, but only you rather than any other lender will be able to see it. A soft search does not therefore affect your credit rating.
If you do not have a good credit history because you’ve never borrowed before or have a bad credit rating, you may not qualify for the very best credit card deals in the market. However, some credit cards are designed specifically for those who need to build their credit score. Please be aware that they often come with low credit limits and high interest rates.
If you miss a repayment on your credit card balance, you may be charged a fee, your credit score could be affected, and/or you may lose a promotional rate of interest.
If you click through to a card provider, make a full application and get rejected for a credit card, this will leave a mark on your credit report and could lead to further rejections in the future. That’s why its always a good idea to check your eligibility, before you apply.
Most credit cards can be used abroad, with the same restrictions as using it at home. However, you may be charged a foreign transaction fee (a percentage of the value of each transaction). You should check with the card provider and use a different means of payment if you want to avoid incurring this type of fee.
In certain circumstances, section 75 of the Consumer Credit Act makes a credit card lender jointly responsible with a retailer or supplier for any goods or services you purchase with your credit card. This means if the products or services are faulty, if there was any breach of contract or misrepresentation on the retailer’s part, the credit card company may be able to help you to recover the funds. This does not mean that you can recover money from both sides and please be aware that the value of the product or service must be between £100 and £30,000 to be eligible to make a claim.