Important Things You Should Know About Credit Cards Before You Apply?
Searching for a credit card can be an overwhelming and confusing experience.
A quick search on various credit card lenders and a comparison website will bring up an endless selection of credit cards all claiming to offer you the best. It’s important that you understand what you’re applying for before you sign up for a credit card.
Here are some things you should know before applying for a credit card.
What are the benefits of a credit card?
When one uses their credit card responsibly, it can be a valuable and rewarding way to make purchases.
Credit cards offer a quick and handy way to make large, and small, purchases. A lot of credit cards also have additional bonuses for example–
• Consumer protection
• Cashback
• Spread the cost of large purchases
• Loyalty points
What protection do credit cards offer when making purchases?
In the UK under the Consumer Credit Cards Act 1974, consumers have extra protection when they purchase an individual item worth between £100 and £30,000.
However, in the Republic of Ireland, this is not the case. The level of protection for credit cards is the same as debit cards. Purchases made with credit or debit cards are protected by ‘chargeback’.
Through chargeback, you will be able to claim a refund through your card provider for purchases that don’t arrive or are damaged/ not as described. This protection applies regardless of whether the retailer is still trading or not.
Although offering chargeback is not a law, it is still worked into the procedures of most credit and debit cards. Both Visa and MasterCard’s have added chargeback to all of their cards.
Chargeback is also available in the UK.
What exactly is APRC (or APR)?
APRC stands for Annual Percentage Rate of Change (or Annual Percentage Rate as it’s also known as). Mortgages, loans, and credit cards include APRC and APR.
With the help of APRC/ APR, one can understand what percentage of interest you pay throughout the year.
What about interest-free?
The majority of credit cards have an initial interest free period. This term, essentially, means that you can borrow money without incurring any interest charges; this however only applies as long as you pay off your card in full each month.
It is best to check the exact details of your interest-free card, for instance, it’ll be good to know –
• Length of interest-free period
• Charges for cash withdrawals
• Any other additional fees or charges
• The rate which you will begin with post the end of the interest-free period
What are the downsides of a credit card?
As with all things in life, there are downsides to credit cards. The biggest issue people face with credit cards is debt. If you fail to pay your full bill each month, then you will find that interest will quickly build up.
The best course of action is to pay as much of your bill as you can afford each month.
There are also other additional charges for missed payments, late payments, or exceeding your credit limit. There are also substantial charges applied for cash withdrawals; these may still be applicable during interest-free periods.
