Credit Card
Choosing the right credit card can be a daunting task. Deciding between frequent flier miles, cash back rewards and discounts from your favorite stores can be a tough choice. check-options.com can help make your decision easier with our helpful credit card tips and information. We offer an array of easy-to-understand credit card info on establishing credit, advantages of using credit cards and other frequently asked questions. We want to help you make an informed decision with your finances before applying for a bank credit card of your own.
Benefits:
- ☂ Deceptive Plastic
- ☂ Credit Card Debts
- ☂ Credit Cards Use
- ☂ Savings or Credit?
Types of Credit Cards
Since each person's financial needs are different, it makes sense that there are different types of credit cards. Before you apply for a credit card, become familiar with the various kinds of credit cards to make sure you're choosing the best credit card for you.
Standard Credit Cards
The most common type of credit card allows you to have a revolving balance up to a certain credit limit. Credit is used up when you make a purchase and made available again once you've made a payment. A finance charge is applied to outstanding balances at the end of each month. Credit cards have a minimum payment that must be paid by a certain due date to avoid late-payment penalties.
Standard credit cards are also called "plain-vanilla" credit cards because they offer no frills or rewards. They're also uncomplicated and relatively easy to understand.
Premium Credit Cards
These cards offer incentives and benefits beyond that of a regular credit card. Examples of premium credit cards are Gold and Platinum cards that offer cash back, reward points, travel upgrades, and other rewards to cardholders. Premium cards can have higher fees and usually have minimum income and credit score requirements.
Both standard credit cards and premium credit cards have specific types of credit cards. Student credit cards, zero percent interest cards, and travel cards are just a few types available.
Charge Cards
Charge cards do not have a preset spending limit and balances must be paid in full at the end of each month. Charge cards typically do not have a finance charge or minimum payment since the balance is to be paid in full. Late payments are subject to a fee, charge restrictions, or card cancellation depending on your card agreement.
Limited Purpose Cards
Limited purpose credit cards can only be used at specific locations. Limited purpose cards are used like credit cards with a minimum payment and finance charge. Store credit cards and gas credit cards are examples of limited purpose credit cards.
Secured Credit Cards
Secured credit cards are an option for those without a credit history or those with blemished credit. Secured cards require a security deposit to be placed on the card. The credit limit on a secured credit card is equal typically at least the deposit made on the card, but it could be more in some cases. You're still expected to make monthly payments on your secured credit card balance. Check out reviews of the best secured credit cards.
Prepaid Cards
Prepaid cards require the cardholder to load money onto the card before the card can be used. Purchases are withdrawn from the card's balance. The spending limit does not renew until more money is loaded onto the card. Prepaid cards do not have finance charges or minimum payments since the balance is withdrawn from the deposit. These cards are not actually credit cards and they don't directly help you rebuild your credit score. Prepaid cards are similar to debit cards, but are not tied to a checking account.
Business Credit Cards
Business credit cards are designed specifically for business use. They provide business owners with an easy method of keeping business and personal transactions separate. There are standard business credit and charge cards available.
Credit Card Frauds
Have you ever eaten at a restaurant, paid with a credit card, and forgotten to get your copy of the credit card receipt? Did you know that many of these receipts have your credit card number printed right there for anyone to see (and use)? And, if you've signed them, your signature is also right there for someone to carefully copy. This can lead to the most simple form of identity theft.
With this bit of information, some unscrupulous person can be well on his way to making purchases either by phone or on the Internet using your credit card number. You won't know about it until you get your statement (a good reason why you should always study the charges on your credit card statements!). All they have to have, in most cases, is your mailing address, which can be looked up in a phone book or easily found on the Internet.
Credit card fraud is identity theft in its most simple and common form. It can be accomplished either through a scenario like the one we just mentioned, or it can happen when your pre-approved credit card offers fall into the wrong hands. All a person has to do is get these out of your mailbox (or trash can) and mail them in with a change of address request and start spending. Someone can even apply for a credit card in your name if they have the right information. You won't know a thing about it until the credit card company tracks you down and demands payment for the purchases "you" have a racked up.
With a person's name, social security number and date of birth, someone can get loans, access the person's existing bank accounts, open new bank accounts, lease or buy cars, get insurance, you name it. Think about the things you throw in the trash. Do you throw your pay stubs away once you've recorded the amount in your checkbook?
Take a look at some of the information on that seemingly unimportant piece of paper:
Your full name
Your address
Your social security number
Your complete bank account number (if you have direct deposit)
Your employer and its address
Your rate of pay
Now, think about the types of information you have to provide in order to get a credit card or a loan or lease a car. There is very little additional information that is needed in order to get that loan. I recently got a home equity loan and did all but the final signing of the documents over the phone, and faxed all of my financial information directly to the loan officer. It would not have been that difficult to "create" those documents using someone else's social security number, bank account numbers and other personal information.
That's a scary thought! Imagine finding out that someone had gotten a mortgage in your name. Clearing that up with the bank and getting it off of your credit history would be quite a battle. You are left with the time-consuming task of repairing your credit and getting your finances back on track.
Which type of credit card is right for me?
Used wisely, a credit card can be great for life’s little emergencies. We’ll help sort your annual fees from your APR. And yes, there’s more to a balance transfer than shifting weight from one foot to the other…
0% on balance transfers - These cards let you move debt from an existing credit card (or cards) onto a new credit card and pay no interest on the balance you transfer for a period of time. You could however be charged a balance transfer fee for moving money onto these cards and you must pay off the minimum amount each month and the outstanding amount before the 0% deal expires to avoid being charged interest.
0% on purchases - Useful if you’re planning to buy more expensive items, these cards allow you to spread the payment over a number of months without paying interest. That’s assuming you pay off the minimum amount each month and the outstanding amount before the 0% deal expires.
0% on balance transfer and purchases These offer interest free periods for new purchases and interest free balance transfers from other credit cards. Again, you could be charged a fee for transferring your balance and you need to make sure you pay off the minimum amount each month and the outstanding amount before the 0% deal expires.
Reward cards - Some credit cards offer a feature whereby you can earn cashback, points, air miles or another reward as you spend. Each card will have its own terms and conditions, however, so be clear on what you’re signing up for. Don’t forget, you’ll need to pay off the balance in full each month to avoid charges.
Credit building cards – If you have a low credit score, these types of cards – also known as bad-credit cards – could help you out. They might give you access to funds and, when used in the right way, could help you build up your credit rating.
Use abroad -Designed specifically to use while you’re travelling or on holiday, these cards usually have low or 0% fees for foreign usage charges. They may also come with favourable exchange rates while you spend abroad.
Money transfer credit cards -These cards allow you to transfer cash from your credit card directly into your current account. You can repay the balance, often interest-free, over a set period of time. But watch out, there’s usually a money transfer fee, and if you don’t pay the minimum amount each month interest will be charged.
Frequently asked questions
Credit cards let you purchase things on credit, online and instore. Each month, your card provider will send you a statement (online or by post) informing you of the outstanding balance you owe and the minimum payment required.
If you choose to pay just the minimum amount, and not the statement in full, you may incur interest charges on the outstanding balance. Every credit card is different and so charges and fees will differ – always read your terms and conditions with care.
Credit cards are protected by Section 75 of the Consumer Credit Act. If you make a purchase between £100 and £30,000, you can get the money back from a card issuer if either the seller goes bust or your item is faulty. Credit cards can also help to build your credit score.
On the other hand, people can (and often do) get into serious debt problems when it comes to the misuse of credit cards so you have to use them carefully. Find out more about some of the charges which can affect credit card users
The annual percentage rate (APR) lets you know how much interest you’ll pay for borrowing money on a credit card. This is typically stated as a yearly interest rate.
For most cards, you can avoid interest payments on transactions if you pay your balance in full each month by the due date. Learn more about APR, including the difference between personal and representative APR.
It sounds obvious, but the more you pay the faster your debt will disappear so always aim to pay more than the minimum payment due. The minimum payment is the lowest amount you need to pay in order to avoid potential penalties.
It’s usually calculated as a percentage of your balance – don’t think of it as a fixed amount. It’s not. The amount you need to repay each month as a minimum will fall as your balance reduces.
The three main credit reference agencies are Experian, Equifax and CallCredit. These all have information about you which lenders can see before making a decision on offering you credit. Since May 2018 and with the introduction of new GDPR regulations, it remains free to check your credit score online.
Your credit history, also known as your credit report or score, is a major factor in determining if you’ll be accepted for a credit card. Lenders will take your score and use it to judge how likely they think you’ll be able to repay debt on a card. Learn more about credit building cards.
It’s worth knowing that you may be asked to pay a higher rate of interest if a lender sees you as a higher risk. Each lender will have their own reasons for the rates they set and so understanding what’s in your credit file is a really good place to start.
We have many credit cards for you to compare, from major banks and leading credit card providers. But we don’t compare every single credit card available in the UK.
That’s because some credit card providers have exclusives through their own branches or websites, or on other price comparison websites – in the same way that we sometimes do. Also, there are credit cards which are only available to people in clubs or membership organisations.
