Types of credit cards
|
|
There are various types of credit cards available, generally varying from in store cards to those that are targeted towards the higher spender.
VISA - This is an international payment and card services organisation owned by 21,000 financial institutions.
MasterCard - This is an international corporation, with more than 15,000 member financial institutions that run a payment service and card scheme.
Affinity cards - These are credit cards that support organisations such as charities, football clubs, and other organisations. This type of credit card makes regular donations to your chosen organisation based on a percentage of the amount you spend on your card.
Gold & Platinum cards - These are credit cards that provide additional benefits and are normally only available to higher income earners.
Loyalty Cards - These are credit cards that offer reward programs which include added incentives such as cash bonuses, shopping points, Air Miles or other discounts.
Rates and Fees
Most credit cards have annual fees and interest charges. Interest rates for credit cards tend to be high and do vary between companies. Some companies have penalty payments for late or returned payments or if you exceed your credit limit. Card issuers normally stipulate a minimum monthly payment of around £5 or 5% of the outstanding balance on your card.
The key points you should check when looking for a credit card are:-
The APR (Annual Percentage Rate) - this is the interest that you will be charged on your credit card debt shown as an annual rate.
Annual fee - This is a fee which may be charged by some credit card companies.
Tariff of charges - This is the list of charges associated with using your card and should be read carefully as charges can differ from one company to another.
Records and Checks for credit card
On application for a credit card the company will check through your history with a reference agency (all of which will be on record) to see if you have a good credit history. County Court Judgements (CCJ's) will be visible against your name if you have any along with any possible mortgage arrears. If you have these (one or the other) the company may decline your application for fear that you will not pay back the money you have borrowed.
Rebuilding credit:
If you have a bad history it you may have trouble getting future credit. However this can become a catch twenty - two situation when trying to rebuild. If your application keeps being refused how can you demonstrate that you are suitable? The best way to do this would be to consult a specialist adviser who may be able to help you find the best route in re-building your credit status.