Product Description
Credit cards are a convenient way to buy items you need or want when you don’t have the cash spare. You are technically borrowing the money you need from the credit card provider and paying it back at a later date with interest added. The range of credit cards available today is vast with many offering special offers and additional benefits to attract new customers. They all work in basically the same way though – you borrow what you need on credit and then pay it back in monthly instalments until the debt is paid, along with interest of course.

The Main Players
There are plenty of providers to choose from at present however the most popular include Virgin, MBNA, Capital One, Barclaycard and Natwest – all of which have very similar rates of interest on offer. Alternatively the credit cards from the big supermarkets such as Tesco, Sainsbury’s and Asda are worth a look as they tend to offer in-store incentives in addition to their competitive rates.

Pros of Credit Cards

• They allow you to buy items you want or need without having the money in the bank.
• The purchases you make that are over a certain amount will be automatically insured with some credit cards. Others may charge a small fee but this is still cheaper than insuring the items separately.
• They are a good back-up source of money towards the end of the month when things get a bit tight. Plus, when the balance is paid in full within 30 days you don’t get charged interest on the borrowing.

Cons of Credit Cards

• It is very easy to get into debt with credit cards as the temptation to shop without using your own cash often gets the better of you.
• You have to pay interest on your credit card balance whenever it isn’t paid off in full. Today most cards charge between 15 and 22% on all purchases and even more on cash withdrawals.
• The interest rate that is advertised may not be the one you receive when you first get your credit card – it may say 17.9% but this may be for top customers and you may get the standard rate of 21.9%.

Things to Consider when Choosing a Provider
There are hundreds of providers to choose from today and many of them offer special incentives to get you to sign up. These are all well and good but it is the interest rate and other aspects that you need to consider first. Choose a credit card issuer with a low standard interest rate and if they have an introductory 0% interest period then so much the better. Credit cards that offer cashback or points when you make purchases are also a good bet but only if their interest rate is low enough.

Check the small print as well for additional charges that could affect you, such as late payment charges or exceeding your credit limit. Some smaller issuers may also charge for administration fees if they have to send reminders and their phone numbers may not be free of charge.

BUYability Summary
Credit cards are a great addition to your purse or wallet when used sensibly. It is very easy however to get into debt with them and issuers have a nasty habit or increasing your credit limit whenever you get close to it. If you can control your spending though, they can be a real lifeline when needed and they help to improve your credit rating at the same time.