What is a credit card?
Credit cards are small plastic cards with a magnetic stripe on one side. They represent a contract between you and a lending company that allows you to draw money for purchases against a pre-set spending limit. When you use credit cards to make payment for your purchases, you are borrowing money from the issuer of the credit card and agreeing to pay it back at a specific rate of interest.
What is APR and how is it determined?
The letters APR stand for Annualized Percentage Rate and it expresses how much you will pay for the privilege of swiping purchases on your credit card as a percentage. In simple terms, the higher the APR on credit cards, the more you'll pay in interest, although there are other fees that are included in the calculation.
What's the best credit card?
That's not a simple question to answer. A better question is "what's the best credit card for me?" In order to choose among all the credit cards on offer in the UK, you need to understand your own spending habits, your current credit score and how you intend to use the credit cards for which you're applying. There are many different kinds of credit cards. Which one is the best for you depends a lot on you.
How many credit cards should I have?
There's no hard and fast rule about how many credit cards you should have in your wallet. Most people have three or four one credit cards for general use, one for long term purchases, one or two store credit cards and perhaps a credit card specifically for petrol. What's more important is how much debt you're carrying and how much credit is available on your credit cards.
What is the minimum balance?
Minimum balance or minimum monthly payment is the least amount that your credit card company will accept as a payment on your account each month. It's generally equal to a percentage of the total balance or a flat rate, whichever is greater. Historically, the minimum monthly payment on credit cards barely covers the interest that's accruing on the outstanding balance, so paying the minimum monthly payment on your credit cards is a good way to ensure that you'll stay in debt forever. Credit cards have recently raised their minimum monthly payments to at least 5% of the outstanding balance, which means that making minimum monthly payments on your credit cards will at least affect the principal balance.
What's the difference between a charge card and credit cards?
A charge card generally allows you to make purchases just like credit cards do, but you'll be expected to pay down the entire outstanding balance each month.
What's a rewards credit card?
Rewards and cashback credit cards are credit cards that feature loyalty schemes. They offer "points" or cash back on the purchases you make with the cards to encourage you to use your credit cards more often. The amount of points or cash you get back is dependent on the amount of your purchases and may also be affected by where you buy and what you buy. Points can be traded for specific merchandise and rewards offered by the issuing company.
Where can I find the best credit cards?
Skip the adverts in your inbox and post box and take your search for credit cards online. The banks and companies that issue the best credit cards don't have to spam your mail with come-ons. You'll find many online credit card comparison sites like moneyeverything.com, where you can compare credit card rates, rewards and other factors side by side so that you can easily choose the credit cards that are best for your use.
