CREDIT CARD GUIDE

Credit cards are a form of borrowing used to purchase goods and services, to obtain cash advances and for consolidating debt. For the majority of credit cards interest is charged if the balance is not paid in full by the ‘payment-due date’. You can benefit from up to 59 days interest-free credit depending upon when your purchase is made. Some card providers charge an annual fee which can be waived in certain circumstances.

A specified credit limit for each cardholder will be agreed at the outset: it depends upon individual circumstances and this is reviewed regularly.

Most credit card issuers insist on the cardholder paying a minimum amount each month or paying a percentage of any outstanding balance each month. There may be a penalty for late or returned payments or for exceeding any personal credit limit.

Credit cards may offer introductory rates that are lower than the standard interest rate for a specified term. This introductory rate is usually for purchases and balance transfers but it may also apply to cash advances. It is advisable to check the terms for clarity.

The interest rate charged on cash advances is usually not the same as for purchases. There is usually a fee for using your credit card to obtain cash and an additional charge for using your card abroad.

Balance transfer rates are applied to existing card debt that is being moved from one issuer to another or a consolidation of other debts. These rates tend to be lower than standard rates and apply to the debt transferred or consolidated for a specified term or until it is repaid in full.

For cardholders who pay off their interest in full each month there are other benefits offered.

Loyalty points are a way of gaining a benefit from using your card and can be used in varying ways. Other cards offer benefits such as free travel accident insurance, discounts on holidays, or free purchase protection insurance (particularly useful if buying over the Internet or by telephone).

Gold / Platinum Credit Cards

A higher level of income is usually needed to qualify for these cards and they offer additional benefits such as free travel insurance, free card protection, savings on travel and / or hotels and free extended warranty for additional year(s) on many household appliances.

Charge Cards

Charge cards have no pre-set spending limit and require the user to repay any balance in full each month. Most issuers charge an annual fee for membership. Charge cards are often termed Travel & Entertainment cards (T&E) and they offer benefits for the traveller.

Donation Cards

These are issued by credit card companies and operate as standard credit cards but a percentage of purchases made via card usage is donated to a charitable beneficiary by the issuer. A donation is also made to the beneficiary on issue or first use of the card.

Store Cards

Store cards are a form of credit card but are issued by or for a particular retailer and can only be used in that retailer's store(s) / chain (unless it is endorsed by a credit card company). Some still charge up to 30% a year. Avoid at all costs, unless you are certain that you will pay them off in full each month.

Credit card guide...
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