What is the definition for a credit card?
Credit cards allow you to borrow money easily to pay bills, buy goods or services. Based on your financial situation, the credit card company places a limit on how much you can spend on the card. Once you reach this limit, the card will not be available to you until you have paid off some debt. While there is no time limit on repaying the debt you must make a minimum monthly payment to avoid any penalties. However, you can pay more than that.
Operation of credit cards
While credit cards have different perks and interest rates depending on their purpose, the basic concept is the same.
They allow you to borrow money at a fixed rate, also known as the Annual Percentage Ratio or APR. This limit can be set by the issuer. The time between buying anything and paying interest is usually 56 days. If you pay your monthly loan in full, the loans are almost unassailable.
A credit card is safer than cash or a debit card. According to Section 75 of Consumer Credit Act, if you use your credit card to pay any portion of a transaction that costs between PS100 to PS30,000, both the card provider and the cardholder are jointly liable for any damages.
This means that if the vendor does not meet your expectations, you can appeal to them for a full refund. This is particularly important for purchases outside the UK. You may not be entitled to the same refund rights there as in the UK.
Varieties of Credit Cards
You can use your credit card for many other purposes than just making purchases and then paying later.
Credit cards can also be used to pay off other obligations by using money transfer or balance transfer credit cards. They can also be used to receive bonuses and rebates, travel abroad for less, or to improve your credit score.
Balance transfer credit cards
You can transfer your debt from one credit company to another with balance transfer credit cards. However, you will not pay interest for a certain period.
The best packages offer 0% interest for up to two years, or longer.You will normally be required to pay a balance transfer fee if you wish to extend your 0% term. This is usually a percentage of the total amount transferred. The fee is usually between 1% to 4% depending on how long the offer period is.This might be cheaper than having your debt on the same card. After the 0% period ends, interest will be charged on any remaining balance.
Get 0% interest on your credit card purchases
A 0% purchase credit card does not charge interest on any debt that is created by new purchases. However, you will still have to pay the minimum monthly amount.
This means that you can borrow money free of charge as long as the balance is paid off before the 0% period ends. You will be penalized if you don’t pay the entire amount due to the credit card company.
Cash-back and incentive credit card
Some credit cards offer rewards or bonuses for purchases. These cards often have higher interest rates than others, so make sure you only apply if you are able to afford the full monthly payment.
Cashback credit cards allow you to reimburse a portion of your purchases by transferring cash into your account. It can be withdrawn at any time, or used to repay some credit card debt.
You can earn air miles and supermarket loyalty points, which you can use to purchase flights and vacations.
Your spending habits and lifestyle will determine the best reward credit card or cashback credit cards for you. To get the best out of your rewards and cashback credit cards, consider which ones are most important to you.
International travel credit cards
You can make purchases abroad with your travel credit card without paying foreign transaction fees like regular credit or debit cards.
To determine the price of a credit card for overseas travel, the currency rate used by the payment issuer (MasterCard exchange rate or Visa exchange rate), is used to determine the amount in pounds. There are no additional charges. You’ll get one of the most competitive conversion rates, plus the added benefit that your purchases are covered under Section 75 of Consumer Credit Act.
Transferring money using credit cards
To deposit money into your checking account, you can use a money transfer card. You can pay off any debts you want or spend your money however you like. Money transfer cards can be used to pay off high-interest overdrafts and to obtain a low-interest loan.
Money transfer credit cards like 0% balance transfer cards have 0% interest offers. You can therefore return the money with no interest for up to a year, or even longer depending on which credit card you are approved for.
The fee for transferring funds from your credit card to your account is approximately 4%. However, this can vary depending on which credit card provider you use. This fee may be significantly less than paying back a PS2,000 loan, or overdraft obligation.
Take a look at the various money transfer credit cards available today.
Bad credit can be restored and you may qualify for credit cards
Even if your credit score is low or you don’t have any credit history, you may still be eligible for a credit card. These credit cards can be beneficial for people with poor credit scores and can help improve their credit score.
Your credit score will be boosted by the fact that every loan payment you make is documented on your credit report. Because credit building credit cards have high interest rates and credit limits, they encourage you to make your debt payments on time.
How to choose the right credit card for you
You will find the best credit card that suits your needs.
If you have debts on other credit cards, and wish to reduce interest payments, a 0% balance transfer might be a good option. An overseas card may be a good option if you are planning to travel abroad soon. A 0% purchase card can help you spread the cost of furnishing a new apartment without having to pay interest.
You can use multiple cards simultaneously, which is a good thing. Unfortunately, applying for multiple credit cards simultaneously can damage your credit score and cause other lenders to turn you down.
How to apply for a credit card
Start by looking at different credit cards to find the one that suits you best. Once you have decided what you want, you can use an eligibility checker that will show you how likely it is to be granted.
You must be at least 18 to qualify for a credit card. However, your financial situation will determine your eligibility.
Credit card companies may offer cards to people with poor credit histories or who have never borrowed money before. However, they will likely limit their spending or give them a short interest-free period.
Once you have decided what credit card you want, the normal credit card application process is:
Online credit card application takes approximately 5 minutes
Wait for a reply to find out if your application has been approved or denied. This could take as little as one minute, or as long as two months.
Once you have been accepted, wait for your card to arrive in the mail. This usually takes between 5-10 business days.
It may be necessary to register your card online or to call the supplier to activate it before it can be used. This takes only a few minutes.
It’s generally quite basic in terms of the information you will need to provide.
You will need to provide information about other accounts that you wish to transfer to your credit card when applying for a credit card to balance transfer or money transfer.