Thinking about applying for a credit card? Then you’ve probably got a few questions you’d like answered. The good news is, you’ve come to the right place.
There’s a lot of information out there about credit cards – including some pretty common myths and misconceptions. We’re here to answer some of the biggest questions out there so you can handle your credit card like a pro.
A major plus point for using a credit card rather than a debit card or cash is that you get extra protection on purchases thanks to Section 75 of the Consumer Credit Act.
As long as it’s not through a money transfer, if you make a purchase of between £100 and £30,000 on your credit card, and you are entitled to a refund from the supplier, you could claim it back from your credit card provider instead – giving you greater peace of mind when you’re shopping.
If you’ve left your debit card at home and need cash quickly, you can use your credit card to withdraw money from a cash machine.
However, it’s important to remember that, because that’s not what credit cards are really designed for, there’s a chance you’ll be charged a fee for it. How much will depend on your credit card’s terms and conditions.
Your cash withdrawal may also be charged at a higher interest rate than regular credit card purchases and if you do it regularly, your credit rating might be affected.
Exactly what you need to apply for a credit card can differ from provider to provider, but here are some of the things you might need:
When you sign up for a credit card, your provider agrees to let you buy things on credit and pay the amount back in instalments, plus any interest.
Your provider will send you a credit card statement each month. This will include a minimum monthly payment that you must pay by a set date. You could also choose to pay a higher amount back or even pay your balance off in full. It’s worth remembering that if you only pay the minimum amount each month, it will take longer to clear your balance.
If you don’t meet your minimum monthly repayment, you might have to pay a charge or your interest rate might go up. Missing a few payments in a row could even cause a dip in your credit rating.
Find out how much you could save by changing the way you pay off your credit card. Simply put the details from your credit card statement into our calculator. Then adjust the amount of your monthly payment and see how much you could save by paying a higher fixed amount you can afford each month.
APR stands for Annual Percentage Rate. This is the amount you will be charged for borrowing from your credit card provider each year. Your APR is made up of the interest rate on your credit card plus any arrangement or admin fees. That means that if you choose a card with a low APR, you’ll have less interest to pay each month and you might be able to lower your repayments or repay your balance sooner.
There’s no right answer to this one because it really depends on your individual circumstances.
When you apply for a new card, your credit card provider will look at the cards you have already, your credit history and how much other credit you’ve got to see whether giving you more feels risky.
Another little help: just because you get approved for more than one credit card, it doesn’t mean you should always take them. Having lots of credit could make keeping up with monthly payments tricky and make it harder to take out a loan or mortgage.
When you apply for a credit card, your provider will want to know how well you’re likely to handle your credit. The easiest way for them to find out is to have a look at your credit rating, a score that’s worked out by looking at things like your credit history, past repayments and current borrowing.
A limited credit history – or even bad credit – doesn’t mean you won’t be able to get a credit card. In fact, some starter or foundation cards are designed to help you start building or repairing your credit rating.
We’ve covered some of the most common questions but if there’s anything else you need to know, speak to an advisor to find out more.
The content on this page aims to offer an informative introduction to the subject matter but does not constitute expert financial advice specific to your own situation. All facts and figures were correct at time of publication and were compiled using a range of sources.