A Credit Card lets you pay for purchases using borrowed money, your bank will usually agree a limit to how much you can spend on your card. The credit that you use has to be paid back at a later date, along with interest, which will vary from card issuer.

Credit Cards

Your bank will usually agree a limit to how much you can spend on your card. If this does not happen it is important to ask and agree a limit so that you do not suffer any penalty charges.

A Guide to Credit Cards is avalailable from MoneyHelper.

The credit that you use has to be paid back at a later date, along with interest, which will vary from card issuer. Additionally, most credit cards also have an interest-free borrowing period, provided that your bill is paid in full and on time every month.

When you apply for a credit card you will be Credit Scored – details of which can be found at this link.

More information and advice on credit cards can be found at the following links:

It is important to be aware of credit card interest, this is called APR (or annual percentage rate), and can be very high. If you fail to repay a bill plus the APR you can quickly get into financial trouble.

For more information on choosing and applying for a credit card, click here.

Reward Credit Cards

Some credit cards give you points you can then redeem against goods and services – these are known as reward credit cards.

The points offered can also be converted into vouchers for in-store purchases, making it possible to work out an equivalent value to the cashback offered by other cards for the same spending.

Some reward cards also offer points which can often be traded for special offers in-store or days out.

A comparison of available Reward Cards is available from uSwitch

Store Cards

A Store Card is a credit card you can only use with one high street chain or group. As with a credit card, you use a store card to buy things on credit and pay off the bill at the end of the month.

Just like with a credit card, there are charges and interest if you don’t pay off the bill. These can be very high.

Do not confuse store cards with credit cards linked to shops. Tesco, Sainsbury’s, John Lewis, Marks & Spencer and Asda all offer a store-branded credit card which can be used anywhere and not just in the named shop.

For more information on store cards including their dangers, follow this link.

Loyalty Cards

Loyalty cards are designed to offer rewards to regular customers, usually in the form of points that can be redeemed against purchases, to encourage you to keep shopping in the same store. 

While credit or store card reward schemes work in a similar way, loyalty cards don't allow you to pay with them (except when redeeming points).

For a comparison of Loyalty Cards follow this link.

It's possible to boost the value of your loyalty points by up to four times without spending a penny. Full details are available at this link.

Credit Card Cheques

Credit card cheques, also called convenience cheques or promotional cheques, are blank cheques that can be used as an alternative to using your credit card.. You can also use them to pay bills or other debts such as outstanding balances on other credit cards.

Credit card providers no longer send out credit card cheques without your consent, so if you need one you'll need to request it from your issuer.

Like paying in a cheque (details of which can be found at this link), interest will be charged from the second day after the cheque is paid in. There can occasionally be a handling charge as well - credit card cheques are not legally protected in the same way as credit cards.

For details on credit card cheques, click here.

Choosing a Credit Card

Credit card companies will usually charge you monthly interest on any outstanding balance that you have not repaid, as well as fees or charges for going over your credit limit or for late or missed payments. In addition, credit card companies will usually charge you a fee for cash withdrawals and balance transfers.

For more details on how to manage your credit card and how to avoid fees and charges click here.

It is important you understand this information before even thinking about applying for a credit card.

Information to help choose the right credit card for you is available at the following links:

For a guide on how to compare credit cards and a comparator tool click here.

Managing Credit Cards

If you are using your credit card for a recurring payment to a gym or magazine, it is important to know that there is no common protection system as there is when setting up a recurring payment on a debit card.  

This means you must check out the business before you give them the authority to charge your credit card. Similarly to debit cards, if you wish to cancel a recurring payment, you must contact the company taking the payments – but you should also write to your credit card company, to make sure there’s no mistake.

If you are struggling with credit card repayments follow this link for advice on reducing the cost of your credit card.

If you want to clear your credit card balance follow this link for advice.

Calculators to help you work out how long it will take you to pay off your balance and how much you will need to pay each month, are available at the following links:

For advice on reclaiming unfair credit card charges, click here.

For a list of FAQs on Credit Cards, click here.

Persistent Debt

Your credit card is in ‘persistent debt’ if you’ve paid more in interest and charges than you have towards the card's balance based on your card activity over the past 18 months.

A guide to persistent debt detailing ways of paying of your credit card balance quicker is available at this link.

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