Credit cards can be immensely useful. They allow the carrier to pay for things without worrying about having cash on their person, which can take a lot of the stress out of going out. They are also ideally suited to internet spending. And used sensibly, they needn’t even cost anything. They are also pretty safe and secure. Providers like Santander offer the security of a large institution (see their site for more info on bank credit cards).
One of the advantages of using a card to pay for things is the possibility for claiming back money on a faulty or mis-sold item from a credit card company rather than from the firm that sold you the item. Usually, to be eligible to claim, the goods or services must cost between £100 and £30,000. This protection can be incredibly useful, especially if the trader or supplier has gone out of business and there is no way of getting renumeration from them directly. If you are entering into a dispute with another company, be sure to keep your credit card company informed at all stages.
It’s important to note, however, that borrowing money always comes with potential pitfalls. To understand them fully before you even apply, let’s take a closer look…
The first issue to think about when applying for a credit card is the possible effect on your credit rating. Applying for a large number of cards or switching cards too frequently may appear on your file as though no-one else wants to lend to you. And of course, if you regularly default or consistently pay late, this will also show up on your credit rating.
Credit card fraud is another major potential problem. To protect yourself from fraudulent usage of your card, you must keep it in a safe place at all times, never letting anyone else handle it. Never tell anyone your PIN. Check your statement monthly, shred all receipts, and if your card is stolen report it immediately.
Another potential problem is poor service from your provider. Luckily, if this happens to you, the complaints procedure of an individual institution is augmented by the Financial Ombudsman Service, who are there specifically to protect card users from malpractice.
If you are struggling to pay your bill, it is advisable to contact your provider as soon as there is a problem. They might give you a temporary reduction on repayments, or even freeze the interest.
