Using Your Credit Card

The following sections will provide some useful tips and points to help you make the best of having a credit card.

Click on one of the following links:

Having Multiple Credit Cards
Additional Card Holders
Always Spend Within Your Budget
Cash Advances
Balance Transfers
Credit Card Cheques
Foreign Currency Transactions
Chip and PIN

Having Multiple Credit Cards
It is quite easy to end up with multiple credit cards in your wallet. Be sure to understand how many credit cards you actually need and cancel the others. This is especially the case where you have obtained another card to carry out a balance transfer.

Additional Cardholders
Having another card holder on your credit card can be very handy however make sure that you fully trust the person that will be the additional cardholder. The main account holder is responsible for the debt so you will be liable should the person run up a big balance.

Always Spend Within Your Budget
You should always ensure that you only borrow what you can afford to repay in a reasonable time. Borrowing money on credit cards is generally more expensive than borrowing the equivalent amount via a loan. You should use your credit card as part of a controlled and preplanned budget and not as a means to fund a lifestyle that you really can't afford. A good question to ask yourself before a purchase is whether you would buy the item if you actually had the cash in your pocket and you had to hand it over.

Cash Advances
Depending on the particular credit card it may be possible to withdraw cash at a bank counter, foreign currency exchange or from a cash machine using your PIN. These withdrawls are normally subject to a handling fee, that is normally a percentage of the amount withdrawn and is often subject to a minimum charge. Futhermore the interest rate charged on the advance portion of your balance may be higher than the rate on the remainder of the balance and you will probably not get the interest free period that you get when you make a purchase.

Balance Transfers
Tranferring a balance is when you move some or all of the balance of a credit card to another card, this is usually done to save money by transfering a to credit card offering a promotional interest rate (somtimes 0% for a period). Remember that when the promotional period is finished you will be liable to pay the normal APR rate on the remaining balance.

Before signing up to any balance transfer agreement make sure that you check all the details in the credit card terms and conditions. Some of the main things to check are:

• What is covered by the introductory rate e.g. does it cover new purchases?
• When the promotional period ends.
• Will the special rate end if your payment is late or you exceed your credit limit.

Once you have transfered you balance to the new credit card you should consider whether you still need the old card. If possible it is a good idea to close the old account as the temptation to use it is removed.

Credit Card Cheques
Some credit card companies provide credit card cheques that can be written against the available credit on your card. Be sure to understand the particular implications of using these cheques. Often there is a percentage charge for the use of these cheques. If you do not wish to receive credit card cheques contact your credit card lender and ensure that they do not send them.

Transactions in Foreign Currencies You can normally use your credit card abroad to pay in the local currency. The credit card company will show the transaction on your statement and the interest rate is normally better than the tourist exchange rate. However before you go on holiday it is worthe checking with you lender to ensure that their interest rate is competitive and that there are not any hidden costs.

Chip and PIN
Credit card fraud is a worldwide problem and the chip and PIN programme is an initiative to reduce card fraud. Rather than signing the traditional paper slips you enter a four digit Personal Identification Number (PIN).

Go to www.chipandpin.co.uk for further information about chip and PIN, and tips for choosing and remembering your PIN.

Remember

BalanceTransferReminder.com is not registered with The Financial Services Authority and we are not a financial advisory service. The Website is based on journalistic research. Nothing within the Website is, or shall be deemed to constitute, financial or other advice or a recommendation to purchase any product or service. Any and all information provided within the Website is for general information purposes only. We strongly recommend that independent professional advice is obtained before you purchase any product and/or use any service via the Website.