Credit cards finance can offer flexible ways to access extra funds when you need them – a saving grace for big purchases.
But do you know that credit cards can also be a step towards financial difficulties? Most people are too preoccupied with the benefits of having credit cards, forgetting about the disadvantages.
Using a credit card is not risk free but if you are careful enough, chances are that you will not experience the disadvantages of credit card finance such as credit card frauds and debt, which are the two biggest risk of having and using credit cards.
5 things you should know about your credit cards finance
In fact, it’s easier to apply and get a good credit card deal nowadays provided you have a slightly healthy credit record and you can prove that you can affordable repayments.
You might have been receiving letters from the banks or credit card companies asking you to come take their credit cards and these letters often come with application forms and offers or incentives to lure you to apply.
Just don’t go for it unless you understand what you are about to get into and thoroughly thought about it.
Yes, credit cards make life easier, simplify purchases, and make buying so easy. But what about the fear of being buried in debt?
#1). Poor credit rating won’t get you the best deals
Even though the credit card companies want you to come take their credit cards, they will still check your credit history and rating not only to make sure that you will be able to make the monthly repayment, but also to be able to find out the right deals that suit your needs. It is a general belief that the healthier your credit rating the better!
Make sure your that credit rating is at least healthy before applying for credit cards because this will enable you to get a good deal from the credit cards companies. The leading zero per cent card offers are only available to those with perfect credit histories.
If you have had problems managing money in the past there is no point in applying for these cards as you’ll be rejected. There are cards especially for those with bad credit scores or who have never had a credit card before. See our article on Top 5 Ways You Can Improve Your Credit Score In The UK and get your credit rating in a better shape.
#2). What you see is not what you get at times
There are wide variety of credit cards available and not all credit cards are alike. At times, the rate you see might not be the rate you get when you apply for the credit cards.
The ‘Representative APR’ advertised by the credit card firms is the annual rate of interest but it only has to be given to 51 per cent of people offered the card.
So nearly as many could be charged a higher rate. Don’t let this catch you out.
#3). Manage your cards, make a payment every month
Managing credit cards has now become a financial necessity if you don’t want to end up with a huge debt. Don’t know how to manage your credit cards finance? Check out our money matters article on Top 5 Best Ways To Manage Your Credit Cards Finance.
Credit cards enable you to buy something and pay for it over a number of months. But this doesn’t mean you can pay a bit off now and then when it suits you.
You must pay something off the balance every month. Miss a payment and you’ll be charged a penalty fee. It could also harm your credit score, making it harder to borrow money or get a loan in the future.
#4). A credit card can slash the cost of existing debts
Credit cards aren’t just for spending they can also be good for those trying to clear debts.
If you are being charged a hefty rate of interest on a credit or store card debt switch it to a zero per cent balance transfer card.
#5). You get extra protection if you pay with a credit card
If you buy anything costing £100 or more, paying with a credit card gives you extra protection over cash, debit cards or cheques.
If the retailer goes bust or your goods are faulty you can claim a refund through the card provider.