A Three Step Guide To Credit Cards
Credit cards are a convenient method of obtaining credit and, despite some bad press, when used properly they can provide flexibility & a range of useful benefits for the cardholder. Our three step guide to credit cards tells you all you need to know about your plastic friends.
Step 1 - Choosing the right card(s)
To get the most out of your credit card it’s important to decide whether it’s actually suited to the purpose for which you intend to use it. It’s surprising how many people use a card that doesn’t fit with their spending or repayment habits, and as a result end up paying more than they need for the privilege. A credit card is a useful tool if you make it work for you, but remember you can always save money in interest charges by finding a better deal - the market’s awash with them at present. Beware though, card issuers do have tricks up their sleeve and often manipulate their terms & conditions in order to claw back interest in other ways. The best way to avoid such tactics is to use a different credit card for each different purpose, that way you’ll be getting the most out of your credit card for as little cost as possible. So which card is best for you? Our guide to spending and repayment habits may help you to decide.
Special Uses
Withdrawing cash
Withdrawing cash on credit cards is never recommended as you’ll generally be stung by high interest charges and added fees. It’s well worth knowing the pros and cons before you start, and familiarizing yourself with the terms of your card is a must for anyone considering drawing cash off their credit card. You’ll generally be charged from the date of the transaction so there’s no interest-free period. If this isn’t bad enough, you’ll also be hit by a set fee or percentage of the amount withdrawn just for using the facility. Occasionally card issuers do offer promotional rates on cash advances, sometimes as low as 0%, although consideration should also be paid to cash advance fees and conditions.
Added benefits
Many card issuers reward their cardholders with a range of useful benefits, and these can prove to be a valuable asset to any household. Examples include domestic warranty cover that’ll protect your electrical purchases for up to a year after the manufacturer’s warranty expires, price promise cover that ensures you’ll be refunded the difference should you purchase an item and then find it cheaper elsewhere (including in the January sales), and free purchase protection insurance to cover your purchases against loss, theft or accidental damage for a specified period. You can compare credit cards offering free purchase protection
Donations to charity
Charity cards cover a whole range of good causes and are issued in partnership with the charities themselves. Usually a one-off amount is donated when you first open the account or use your card and in many cases an ongoing donation is made by the card issuer, usually based on a percentage of your spend - all at no extra cost to you. There’s plenty of choice, no matter where your interest lies. To do your bit for worthwhile causes click here
Other
Price-for-risk
Some card issuers use a price-for-risk strategy to determine the rate of interest you’ll pay. In basic terms this means an assessment of your personal circumstances and credit history will be conducted and from this you’ll be offered one of a number of rates. The rate you are offered may be different than the typical rate quoted but this type of pricing often means the card issuer can accept more people for more cards. Look out for our price-for-risk indicator.
Down-sellingMany credit card issuers are able to offer credit cards to more people through the practice of “down-selling”. By down-selling their products card issuers can offer an applicant an alternative product when they fail to qualify for the product they applied for. One of the reasons for down-selling is an applicant’s failure to qualify on annual income, for example a person who has applied for a platinum card may not meet the minimum income requirement and as a result will be offered a classic or gold card. This practice is different from pricing-for-risk and the two should not be confused.
Allocation of payments
Unless you clear your balance in full each month it’s worth paying some attention to the small print surrounding the allocation of payments, otherwise known as the payment hierarchy. Manipulating the payment hierarchy is one of the sneakier methods of clawing back interest currently used by card issuers. It explains how the repayments you make will be used to clear your outstanding balance, and unfortunately it is never as simple as oldest item first. Often balances at promotional rates are cleared before balances at the standard rates, which sees your outstanding balance accumulating interest at a higher rate for a longer period. For example, your transferred balance at 0% p.a. would be cleared before your new spend at 15.9% APR, which could leave you feeling the pinch. Depending on how you use your card, or intend to use it, the payment hierarchy may carry as much weight as the interest rates on offer so bear in mind that disregarding it could end up costing you dear.
Summary or “Honesty”
boxFrom March 2004 all credit card issuers will be obliged to summarise their key product features such as interest charges and fees in an easy-to-understand format, known as a summary or “honesty” box. This will appear in all credit card marketing information, making it easier for consumers to compare deals and assess the implications of opening an account. As part of this overhaul each credit card company will be required to calculate annual interest rates on credit cards using one agreed method rather than one of the two methods used at present.
Step 2 - How do I apply?
You can apply for a credit card without leaving this site. If you haven’t already used the hot links to go direct to a card comparison table then click the button below to find the card that best suits your circumstances.
Step 3 - What if things go wrong?
If you are unable to meet your monthly repayments and are struggling to repay your outstanding balance, you should immediately contact your credit card issuer. The earlier you approach them, the more sympathetic they will be to your situation. Alternatively, consider switching your card to one with lower rates and fees before you become too bogged down with your repayments but beware - if you leave it until it’s too late you may find getting accepted by a new company is a hurdle you may not be able to clear.
If you are refused a credit card and wish to make enquiries concerning your own credit file you can apply to the credit reference agency for your record. Credit reference agencies provide a detailed analysis of your own financial position. In particular your past repayment history, any County Court Judgements or defaults registered against you, electoral roll details and previous credit searches made.
Shocking news circulated in China. A town in Canton is now on trend taking baby herbal soup to increase health and sexual performance/stamina. The cost in China currency apprx $ 4000 (it is about Rs 2000) A factory manager was interviewed and he testified that it is effective because he is a frequent customer. 
Posts
