More On Credit Cards

Around a half of all cardholders pay off their bills in full each month using their cards as a costless form of 'plastic cheque' - this is particularly useful as most retailers won't accept ordinary cheques without a cheque guarantee card, which may limit your spending to as little as £100 in that way. But for the card companies, this practice is expensive and there are rumblings that a flat fee might be introduced on traditional cards (as has already happened with some of the newer cards) to be paid as well as interest on balances.

Using credit cards to get cash can be expensive. For example, with Visa cards, there's a 1.5 per cent handling charge, as well as any interest you incur. With Access cards, there's no handling charge but you start to run up interest from the date you withdraw the cash.

Verdict Convenient and very flexible. Can be relatively cheap - or even free - if you use credit cards carefully. But they are an expensive way of borrowing if you don't regularly pay off what you owe.

TIP - If you use a credit card to buy goods and services which turn out to be faulty, the Consumer Credit Act 1974 makes the credit card company jointly liable with the supplier for putting matters right. This applies to goods costing between £400 and £60,000 - even if you paid less than £400 by credit card (for example, if you used the card to put down a deposit). If your card was first issued before July 1977, you might find that though the card company will compensate you for the faulty goods or services, it might not pay for any consequential damage (such as spoiled flooring due to the new washing machine leaking) - it's worth applying for a newly issued card because cards issued from July 1977 onwards do give you this protection.

TIP - If you don't expect to pay off your bill regularly, avoid the traditional credit cards. Instead go for one of the newer cards with a lower interest rate on outstanding balances.

Loosing you r Credit Card

Report the loss to the card company; once you've reported the loss, you have no liability. But you should take care of your card - see p. 82 for TIP - s about doing this.

WARNING Take sensible precautions when using your credit card to pay for goods and services. For example, never sign a blank voucher, always check the details before signing, and if the 'total' hasn't been written in, insert it yourself before signing. Another precaution you could take is to ask for the discarded carbons from the voucher just to make sure that your card details (which show up clearly on the carbons) aren't left in the waste paper basket where they might subsequently fall into wrong hands.

WARNING Some credit card issuers automatically increase your credit limit without asking you first. If you're worried that the higher limit might tempt you to spend more than you can afford, ask the issuer to restore the lower limit.

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Credit Cards

Where from? Various sources: through banks, building societies, motoring organisations, finance houses, and so on.

How they work With traditional cards, such as the original Visa and Access cards, you have a pre-arranged credit limit and can borrow any amounts up to that limit. You borrow by using your card to pay for goods and services, or to withdraw cash from a cash machine or bank branch. You pay interest on the outstanding balance, and you must pay off a minimum amount each month - usually five per cent of what you owe or £10 if greater - though you can choose to pay more. There's... see: Credit Cards

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