Credit Card FAQ

I am first time user. Which credit card should I opt for?
There are many banks that specialize in issuing credit cards to users who are still building their credit history. Study the cards on offer by these banks but apply for a card from only one bank. If you apply in many, it will show up in your credit record and it will seem you are desperate for cash. Also, as a first time user, opt for a card with a lower credit limit. Once you are able to regulate your spending habits, you can upgrade to a card with a higher limit.

Can I change my credit card if I have a big debt?
Yes you can change your credit card and move your debt to a lower charging credit card. There are many card issuers in the UK who are offering 0% introductory rates for balance transfers. This can help you save lots of money.

Can I switch card at the end of the introductory period?
Yes, if you have outstanding debt on your credit card, you can save a considerable amount in terms of interest by moving your balance to another company offering a 0% interest rate. However, it is important to point out that credit companies are putting barriers to ensure their card holders don't get tempted to the lower introductory rate being offered by the rival companies. Before moving from one company to another, make sure you understand the credit terms and transfer charges.

How is the finance charge calculated?
This varies from company to company. While some credit card companies take into consideration only the current month’s balance, others consider the current and previous months’ balances also. Then again, new purchases may or may not be considered. As a general rule, your finance charge will be calculated based on the average daily balance or the double billing cycle method.

How many credit cards should I keep?
It is better to have two credit cards with £5000 credit limit than multiple cards with the same credit limit. Your credit rating will be adversely affected if you do not make your payments on time. Needless to say, it is easy to maintain records of two cards than many.

What are rewards?
Some credit card issuers offer rewards or incentives such as cash back schemes in order to induce their card holders to spend money using their credit cards. Make sure that the purchases you make are worth the reward.

What are the charges levied on credit cards?
Credit card charges include late or missed payments and over spending your credit limit. Besides, you may also be charged an additional fee for requesting an additional copy of your credit statement.