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"Your Rough Guide to UK Credit Cards"

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Easy Guide to UK Credit Cards

Special Deals / Introductory Offers

The card companies will use various offers to lure you into going with them. Typical would be:

Introductory interest rates

Purchase protection

Anti fraud guarantees:

Emergency cards / cash

Reward / Points schemes


Free Travel Insurance

Holiday perks

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Introductory interest rates

Low introductory interest rates are used to entice new customers. These could apply to all transactions on the card or be limited to any outstanding balance transferred from your old card and so on. Check what they apply to.

Always check what the special rate will revert to later on.

Does it matter? Maybe you're planning to stop using the card when the special rate expires (if you're that organised). Or if you just want to deal with an old card debt and intend paying off everything you owe from now on, then a very low introductory rate followed by a high interest rate would be OK.

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Purchase protection

This is when the items bought are insured for an agreed period after being purchased with the credit card - say 90 days.

Check if this is free.

If so what is the maximum and minimum claim allowed?

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Faulty goods

A benefit of buying by credit card is that the issuer and the supplier are both legally liable for fauklty goods.

Basically this means that the issuer will compensate you if the supplier won't.

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Anti fraud guarantees:

Some of these may be a bit of a con. For example an offer of cover which made you pay for the first ?50 loss would only be giving you what you've already got under the Consumer Credit Act.

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Emergency cards / cash:

The card issuer may offer to sort you out quickly if you've lost your card particularly while on holiday. Most card issuers do this anyway, but not all, so check.

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Minimum payment amounts

When you get your credit card statement it will say what the minimum amount you have to pay off is - and by when. This is usually £5 or 5% of what you owe.

This means that you could always be in debt and keep the card issuer happy just by paying off this minimum amount - provided you're happy for the interest charges to keep mounting.

See You probably won't be paying off everthing you owe for more on this.

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Reward schemes

These could involve anything, typically Air Miles and shopping vouchers etc. You accumulate points as you spend on the card.

You'd probably either get a catalogue of stuff you can buy or be able to use your points to get specific discounts on products and services.

Don't expect to get too excited about what you'll get. Most people don't bother redeeming their points because they're not sufficiently motivated by the offer of a free yellow smartie for every £1000 spent - or whatever...

Ask the issuer what is on offer and how long it would take to build up the points required.

Remember that rewards are probably less important than the interest rate.


See the lastest Best buy tables for cards that offer rewards

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You get 5p back for every £10 spent or whatever.

Never forget that these guys are in the business of making money from you not giving you money.

So don't be too upset when you realise it's not that brilliant a deal.


See the latest best buy tables for cards offering cashback schemes

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Cash withdrawals

Some credit and charge cards allow this but you're likely to be pay dearly for it.

You'll probably be charged higher rates of interest than your normal bank card.

The rates between your credit card shop purchases and cash withdrawals will often vary eg you'll start being charged interest immediately on the cash and/or be charged a fee of, say, £2.

These will be charged on your next statement.

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Free Travel Insurance

This is often offered as perk.

Watch out though as the cover might only be for trips brought on your card.

It's often offered by card issuers who also charge an annual fee. This may make it more expensive than a insurance policy which is more relevant for your needs.

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Stolen cards / Fraud

Fraud is common. Your card could be used by someone else relatively easily. While retailers should always check your signature, tests have shown that even bad forgeries usually get away with it.

The average stolen on a card is £2000.

Skimming is copying your card details for forging onto a false one ie you don't know it's been used until you get your statement.

This can be done quickly with a small gizmo - which could easily be hidden in a waiter's pocket. It's made possible by the continued use of magnetic strips rather than microchips in most credit cards.

You're normally liable for any losses up to £50 until you report your card lost or stolen.

To minimise your risk:

  • Fill in the card receipt fully, drawing lines through empty boxes ie so the amount can't be changed etc.
  • Always keep your card in sight.
  • Tear up the carbon copies and dispose of carefully.

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Internet card fraud

This is less commonplace than imagined. It's much easier for fraud to happen as a result of telephone transactions. Think about it. What's easier. Using the card details someone's given you over the phone or cracking a code that would take the average hacker about 1000 years and a lot of pizza.

What does seem to happen is errors on websites whereby customers credit cards and personal details are revealed to the world in all their naked glory.

This has even happened on the Consumers Association website - so who's perfect?

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Holidays and your card

Most cards will get you discounts on the holiday, car hire etc

If you book your holiday by card you're probably covered if the tour operator goes bankrupt.

You can save a fair amount by using your card to pay for stuff on holiday rather than getting cash from expensive Bureau de Changes. (But be careful about using it to withdraw cash as this may well cost you extra.)

Card issuers vary in their charges for payments you make abroad. It's often 2.5% but some charge 2.75% ... while some differ between Europe and the rest of the world.

Check that any free insurance covers you for more dangerous activities like scuba diving etc. Be very careful on this one.

Be wary of taking that spontaneous microlight flight on the beach unless you're sure you're fully covered.

Holidays and your card checklist

  • Holiday discounts offered?
  • Cover for cancellation of holiday - if paid for with card?
  • Holiday Insurance free?
  • Does it cover you properly
  • Car hire, hotel etc discounts?
  • Charges for using the card overseas?
  • Charges for withdrawing cash overseas?
  • Emergency cards / cash holiday cover

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Credit Cards and The APR

The APR (Annual Percentage Rate) is a way of leveling the playing field by providing a true comparison between different loans - in this case credit cards.

The APR takes all the costs into account. It was introduced by the government to prevent nasty hidden charges.

You can see how charges can be hidden: while the monthly interest rate may claim to be 1% the Annual Percentage Rate may be 15% ie more than 12 times the monthly charge.

This is because the APR has to include everything, wheras the monthly rate can be used as - how to put it politely? - more of a marketing tool. (Did anyone say "con"?)

The APR is a legal requirement. All credit card issuers must make it clear what the APR is on each of their cards.

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Extra Charges / Hidden Catches

The following list shows the main charges that are usually hidden away in the small print.

Rather than getting out the microscope and fine toothcomb a simple call to your prospective card issuer should confirm whether any of them apply.

Exceeding your spending limit If you overspend, most card issuers will penalise you. Check by how much.

Not spending enough. Some card issuers penalise you if you spend less than a certain amount per year or don't use the card enough times.

Late payment If you miss the deadline, you might have to pay a fine.

Unpaid Direct Debits. Many card issuers try to get you to pay by direct debit. While this is usually more convenient, if you haven't got enough funds in your bank and they turn down the Direct Debit you might have to pay a fine. Check if this is relevant to your card.

Duplicate statement charges Need another copy of your monthly statement? Certainly. That'll be. How much?

Card Replacement Your card is lost or stolen. Marvelous! Your card issuer is charging you for the replacement?

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Credit Card Guide

What is a credit card... The usual terms... How to apply for a creditcard

Interest and Credit Cards... Low interest credit cards... When does the interest charge start... How interest is calculated.. How to get interest-free credit... The APR and Credit Cards...

Introductory deals / special offers... Crad Introductory interest rates...

Card Purchase protection... Faulty goods... Anti fraud guarantees... Emergency cards / cash... CreditCard Protection... Stolen cards / Fraud... Internet crad fraud...

Reward schemes... Cashbacks... Cash withdrawals... Holidays and your card... Free Travel Insurance...

Never heard of the card issuer?...

Minimum payment amounts... Credit Card Statements... Annual Fee... Late Credit Card payments... Credit Limit...


All material UK Credit Card Guide and Information © Moneysorter Ltd 1999 - 2013 | Author: By Ed Parry