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Step into any bank in the country, watch TV or listen to the radio, and you're sure to be inundated with adverts offering you credit cards, spewing numbers and acronyms at you, closely followed by a list of reasons as to why theirs is the best.
But what does it all mean? Hopefully this short guide will help.
Credit cards are an ideal solution for those situations where short-term credit is needed - so long as you pay your balance by the due date you will not have to pay any interest on your purchases, and if buying from overseas, online or over the phone, you are better financially protected than if you were to use a debit card. However, not paying the balance off each month is a good way to get yourself into quite a decent amount of debt, and not paying that off is an even better way to ruin your credit rating.
When considering applying for a card, you should consider how you plan to use it. If you can pay off the outstanding balance each month, then the interest rate of the card will not affect you - keep an eye out for cards that offer an interest free period from the date of the transaction. If, however, you cannot afford to pay off the full amount each month but continue using the card, it might be worth shopping around for a card with an interest free introductory period, then changing when that promotion comes to an end.
For all you students, or others with an outstanding debt you'd like to clear, a good choice would be a card with 0% interest on balance transfers, and keeping track of when this ends in order to switch. In many cases there will be a 2/3% charge to pay for the transfer, but this will almost always be outweighed by the amount you save throughout the year.
Another thing to consider when buying a card is this:- How much will you be using it abroad? Most providers add fees on when the card is used abroad, although if you shop around you can usually find a provider who offers reduced or even waived fees for this.
Ultimately, your best bet is to consider what you want from a credit card carefully, compare credit cards online, and always make the most informed decision you can. |
