Credit cards Pro’s and Cons

Before you think of having a Credit Card is is useful to look at their Pro’s and Cons
Pro’s
  • Free, short-term credit – as long as you always pay your balance in full by the due date shown on your statement.
  • Credit cards offer a safe and convenient way to pay for goods and services both in the UK and abroad, particularly if you are purchasing over the internet, phone or by mail order.
  • If you pay for something with a credit card, valued between £100 and £30,000, that turns out to be faulty or which you do not receive because the company goes bust, you can claim a refund from the card provider.
  • If you are the innocent victim of fraud you will not be expected to pay if a criminal uses your card, so Credit Cards offer you Protection against fraud.
  • Incentives for using a card such as loyalty points and cash back, or payments to support a charity.
  • Credit cards are accepted in virtually every country around the world and this cuts down the costs of changing your cash to other currencies and also is more convenient abroad

Cons

  • You incur interest if you are unable to repay your balance in full every month. Interest rates vary significantly so if you can’t afford to clear your debt you should look for a card that offers a competitive rate of interest.
  • The amount you can spend on a credit card is capped so you may not have access to as much money as you expected. Limits of between £300 and £500 are common for those who have never had access to credit before, while those with a good history who have shown that they use cards responsibly are likely to be offered a higher credit limit. That said, because of the credit crunch and rising levels of bad debt, providers are now more cautious about the amount they will lend. So even if you have a good track record with managing credit, you may be offered a significantly lower limit if you apply for a new card.
  • Most, credit cards will charge you if you miss the monthly deadline set for your payment.  The easiest way to avoid these penalties is to set  a Direct Debit from your current account
  • You will also be charged if you go over your credit limit.  So make sure you manage your Credit Card to ensure you don’t pay unnecessary interest.

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