Advice About Credit Cards

A bad debt is borrowing where what is owed has not been reimbursed in compliance with the terms and conditions of the borrowing agreement. A debt is considered bad where it is unlikely that the loan provider will ever be able to get their money back. A bad debt on your credit file will make it less easy if you want to borrow in the future.

A credit check is a kind of search done by a would-be loan provider to gauge how eligible you are for borrowing. They will check out your credit record to know your present and previous financial commitments. They can then award you a credit score to see whether the way that you control your financial affairs fulfils their requirements for lending.

What is a Credit Card?

A credit card is a plastic card issued typically by banks, other financial organisations and stores. If you have a credit card, you can use it to make payments for goods or services instead of using cash or a cheque card. You then pay the balance accrued on the card back to the credit card provider every month, without being charged any interest. However, if you do not pay the balance off in full, you will be charged interest on the outstanding amount.

What do Credit Cards charge?

The amount you will be charged for using or having a credit card vary from provider to provider. Some will charge you an annual fee just for having a card, whether you use it not! However, they do sometimes have ?added extras? such as free travel insurance, as an incentive.

All credit cards will charge you interest on outstanding balances (ie ones not paid off in full once you have received your monthly statement) Again, these vary. Some may offer introductory rates (such as 0% interest for six months or for balance transfers). But these deals are time sensitive, so do check the small print.

As a rule, the lower the APR (which is the annual percentage rate), the less interest you will be charged.

Will I have to pay interest on my credit card?

If you pay off the outstanding balance on your card in full every month, then you will not incur interest charges. However, if you only pay the minimum amount stated or not the full balance, then you will be charged interest. The amount of interest charged will be as shown on your credit card APR agreement.

If you make cash withdrawals on your card, normally interest is charged from the day you withdrew the money until you have repaid it in full.

How do I make payments to my Credit Card?

It is important that you never miss payments in to your credit card ? it can not only incur you extra interest, but could affect your credit report. There are several ways for you to make payments to your credit card account:
1. by cash or cheque over a bank counter, using the payment slip at the bottom of your credit card statement
2. by sending a cheque together with the payment slip to the credit card company
3. via Direct Debit, where a payment is taken monthly from your chosen bank account and paid into your credit card account

What is a Direct Debit?

A Direct Debit is where you agree for an organisation ? such as your credit card company ? to take a variable amount of money from your bank account every month.

In the case of a credit card company, you can agree that they take either all the balance outstanding every month or part of it. This means that provided you have enough money in your bank account, you credit card payment will be made on time every month without you having to worry about it.

To set up a Direct Debit, simply contact your credit card company and it can be organised from there.

What should I do if my credit card is lost or stolen?

If your credit card is lost or stolen, contact your credit card issuer immediately. You can find a 24 hour helpline to call on your statement. They will put a stop on your card so that it cannot be used fraudulently. Also, make sure that when your next statement arrives, that you check it for any unauthorised transactions.

You will have to wait for around 10 days for a replacement card to be used.