Credit Cards

Credit Cards and Charge Cards

Credit cards, Charge Cards, Debit Cards, Store Cards

New! Credit Card Comparison Table

Credit cards offer a convenient way of paying for shopping for goods and services. Credit cards can offer protection particularly when shopping on-line. However, interest rates can be very high and credit cards are not recommended for other than short term borrowing. The FSA Money Made Clear website offers comprehensive advice on how credit cards work, what you should look out for and what to do if things go wrong. The credit card market is extremely competitive and it is always worth shopping around for the best card for your needs.

Consider your needs - if you intend to pay off the balance each month then interest rates are not really an issue, look out for interest free periods, incentives such as cash back, air miles or Nectar points, or perhaps you would prefer to choose an affinity card with a percentage of your expenditure on the card being donated to a charity.

There are currently many interest free offers for balance transfers or purchases. But do read the small print carefully. Look at the fee for balance transfers this may be 2% of the balance or more. Check whether the interest free period applies to balance transfers and purchases, the way payments are allocated may mean that it only applies to one or the other. If in doubt our advice is to not use the card that you used for your balance transfer for purchases - take out another interest free card for that.

You can draw cash using your credit card and some credit card issuers also provide credit card cheques. Do check on fees for both of these options.

When someone applies for a credit card, his or her credit report will be searched by the credit card provider. It’s essential for consumers to check their credit report. Inaccurate or out of date information may lead to customers receiving a higher interest rate (APR) or even being rejected by the provider.

CreditExpert from Experian, the UK’s largest credit reference agency, enables consumers to check their own credit report online FREE for a trial period.

Beware of the cost of using your credit card abroad. Most cards charge commission of 2 or 3%. If you use your card abroad a lot, look for one that does not charge this commission such as the Post Office Credit Card.

Credit Card Comparison Table

Charge Cards differ from credit cards in that you are required to pay the balance off each month. Look at interest free periods, interest or penalty fees if you miss the payment date and, as with credit cards, incentives for use such as cash back or air miles.

Debit Cards are linked to your current account and may be seen as an alternative to using cheques. Generally they also allow you to withdraw cash from your current account at ATMs world wide. Debit cards do not offer the same purchase protection for online shopping or travel bookings as credit cards do. Do bear this in mind when tempted to avoid the surcharge that many airlines and travel companies add for credit card transactions.

Store Cards offer credit at a store or group of stores. There may be an incentive for taking one out such as vouchers with money off purchases. Interest rates are often higher than credit cards - read the small print!

Splash Plastic is a reloadable Chip & PIN prepaid Maestro® debit and MasterCard. It works in the same way as a pay as you go phone; you can top it up with cash at over 34,000 locations nationwide, have your wages paid directly from your employer or transfer money from a bank account to your prepaid card. Spend without fear of debt or fraud at millions of retailers online or on the high street, you can even use it to withdraw cash from ATM’s. Maestro is the most widely accepted payment brand across the UK. More...

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Payment Protection Insurance

Payment Protection Insurance (PPI) can offer security and peace of mind but be sure to check that the cover offered is appropriate for your circumstances and make sure that you understand what the cover costs.

Many people have paid for expensive payment protection insurance when taking out credit cards, only to find that a claim is turned because of exclusion clauses in the small print. PPI can add anything up to 50% to the cost of loans.

It may be that the terms where not fully explained or that the cover was unsuitable for an individual's circumstances. Anyone who feels that they were mis-sold PPI should complain and seek compensation.

The first thing to do is to contact the company that sold you the policy and give them a chance to respond. If you are not satisfied your next port of call is the Financial Ombudsman Service. The Financial Ombudsman Service website includes helpful information and a fact sheet you can download. See also guidance on the FSA Money Made Clear website.