What you should know about credit cards

Credit cards can be a blessing when you need to buy something and you have no cash.

07:34 15 May 2014

Credit cards are great but you can end up ruing the day you applied for one if you do not pay attention. Being approved for a credit card can be a hassle, especially if you have a less than perfect credit score. But a lot of people get so excited with it they forget to do the most basic thing – read the terms and condition of using the credit card. 

 

Of course, interest rates are wonderful, rewards are great but with such glossy offers lenders have had to come up with inventive (and devious) ways to get the most out of customers and they have been doing so by putting really tricky fine print that a majority of people do not read because they are still giddy of low interest rates missing all the catches slotted inconspicuously in agreements.

 

Beware of the 0% interest credit cards

 

• 0% interest deals always sound like a good idea but when you think about it, how is a lender supposed to make money if he charges no interest. What is the catch?

 

• 0% interest is often not a long-term offer

 

• Balance transfers are only interest free if you transact within a specific period

 

• You might have to spend a predetermined amount like £2000 or more in the first three months.

 

The Annual interest rate (APR)

 

You would be surprised to know that 11.9% is considered competitive but two people who apply for the same card and get approved will not be eligible for that rate. 

 

That rate is often applied to purchases; everything else such as balance transfer etc. attracts interests rates of up to 34.9%

 

The Devil Is In the Details

 

Always read the fine print and make sure that you are getting credit cards from a provider with a good reputation.