"I pay with plastic these days. I don't carry around much cash anymore. "
Credit card companies love people who use their cards for most of their financial needs and they're usually willing to “up the ante" as the expression goes, if they see that individuals use their credit wisely. Besides, by paying with plastic, individuals benefit from purchase protection as provided for under section 75 of the Consumer Protection Act.
Card holders who meet minimum payments or pay the full amount each month usually receive offers from their card companies for a higher credit limit. In many cases, they even receive cheques from these companies encouraging card holders to use them for practically any purchase they need to make.
For credit card holders, these questions must be addressed:
- Is it the best card for you?
- Is the minimum payment or the full balance paid every month?
- Does it offer cash back or rewards that can be used to advantage?
With the proliferation of credit cards and the various ways in which they are structured, it certainly pays to shop around for the best one that serves the person's needs in both the short and long term.
The card industry has become creative and flexible and companies offer a huge range of cards including cashback, no-fee, and will even offer zero percent interest on balance transfers for a fixed period, usually from 12 to 14 months to promote their introductory offer.
The general rule of thumb is that if credit card users pay off the full balance every month, a cashback option would probably be the best deal. Purchases are discounted and at the end of 12 months, the card holder receives a sum that can be used in any number of different ways.
If card holders are unable to pay off the balance each month, leaving an existing balance on their cards, the best deal would most likely be an option with a low interest rate averaging between 10% and 12%.
Card holders should know that a credit card can have three separate types of interest rate associated with it and diligence dictates that users should be familiar with what these rates signify because when the monthly statement arrives, the amounts can be confusing. Below you will find a clear breakdown of these rates which serves as a guideline for individuals about to fill in an application. You can also find many online guides for individuals who are not yet familiar with the dynamics of cards and their use.
The three different credit card rates one is likely to encounter are:
- PIR - purchase interest rate: this rate applies to purchases of both goods and services
- BTIR - balance transfer interest rate: this rate is applied to balances transferred from one card to another. Individuals usually take advantage of this facility especially when the existing rate they are paying is too high
- SVR - standard variable rate: this is the rate that is charged on all unpaid balances on the card, except that of the balance transferred from another card
If in doubt, there are a number of very good online services to compare credit cards which provide individuals with key information. This in turn enables them to make an informed decision as to the best card to suit their present circumstances and spending patterns.
Jon Francis has been involved in various areas with the world of finance and has a keen eye for a bargin! He has an in-depth knowledge of credit cards and now helps others get the best from a credit card For more information visit “www.airaid.co.uk"