Credit Card

A credit card is a convenient way to borrow money in the short term. It offers a period of interest free credit. However, if you want to borrow money for a few months then you would be better off getting a personal loan. Credit is not free money, you must pay back whatever you have borrowed. The rule of thumb is that if you are unable to make the repayments then you should not borrow in the first place. If credit cards are used sensibly they offer many benefits but if they are used irresponsibly they could create financial problems. The credit card company will do a number of checks on you before issuing you the card. They will confirm your identity, your address and other details. It is in your own interest to be truthful in all the information you provide in your credit card application.

Credit Cards

What benefits do they offer ?

• Credit cards are a convenient and safe way to pay for goods and services over the Internet, by mail order or by phone, from businesses both in the UK and abroad.

• Credit card will protect you against fraud – if a criminal uses your card and you are the innocent victim of fraud, you will not be expected to pay for it.

• Credit cards offer you free credit as long as you pay your balance in full by the due date.

• A credit card is virtually accepted in every country and is a truly global currency.

• With credit cards you can get loyalty points, cash back, air miles and even support a

charity.

What are the risks ?

• Credit Cards can Lead to unplanned levels of debt.

• If you make a late payment, miss the payment altogether or go over the limit you will incur charges.

• Your credit rating will be damaged if you continually make late payments on your credit card or miss them altogether.

• Credit cards can cost you more and take you longer to pay off than the alternatives, particularly if you only ever make the minimum repayment.

• Having too many credit cards can make it difficult for you to manage your finances.