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Which Credit Card?
Bewildered by the sheer variety of debit cards and credit
cards? Here is a breakdown of some of the main types of debit and
credit cards available:
Debit card
You can use a debit card to buy goods and services. A debit
card is very much like a cheque, unlike a credit card, you pay
for goods straight away and the money comes out of your account
quickly. The amount you spend using a debit card is immediately
deducted from your current account.
A debit card allows you to make purchases whereby the money is
taken straight from your current account, the benefit of a debit
card is that your finances are kept up to date immediately,
without having to wait for a monthly bill as is the case with a
credit card.
Your banking institution issues you with a debit card. Debit
cards offer less protection than credit cards in the event of a
billing dispute. In addition, if your debit card is stolen, it is
possible that your debit card account could be emptied. Most
debit cards have a Switch/Delta/Solo/Electron symbol on them. If
you become overdrawn you will pay interest on the amount due.
Cash card
This lets you take out money from a cash machine (ATM). To use
it, you'll need a Personal Identification Number (or PIN) which
your bank sends you. Each time you use your card at a cash
machine, you'll need to key in this number.
Credit card
A credit card lets you buy goods and services up to a set
limit before you pay for them. A credit card represents a loan
agreement where you are offered credit, providing you pay off a
minimum amount each month. You can charge purchases up to the
amount of your credit limit and pay for them later.
If you clear your balance in full each month, you don't pay
any interest on the money you have spent. But, if you don't,
you'll normally have to pay at least 3-5% of the balance, and
interest will be charged on the outstanding balance. Some cards
charge you an annual fee.
A credit card allows you to live now and pay later. When you
successfully apply for a credit card, you will be advised of your
credit limit. Ensure you stay within it, as exceeding it could
result in either your card taken away from you or being charged
interest on the extra credit you incur.
Charge Card
This is very similar to a credit card, although the monthly
balance must be paid in full. An example of a type of charge card
would be an "American Express" card.
Cheque guarantee card
If you're paying for goods or services with a cheque, you'll
probably be asked for a cheque guarantee card. This means the
bank will normally pay your cheque up to the amount
guaranteed.
Store Card
A restricted form of credit, store cards act as credit cards
in those shops that the card is accepted. Purchases are made
using the card, and then a consolidated bill is sent at the
month's end, which is then settled in a manner similar to a
credit card.
Deciding which plastic card to use can be confusing but it can
help you to reach a decision if you know what you want to use the
card for.
If you just need it as a substitute for carrying cash, rather
than use a credit card, you may as well use a debit card, which
takes the money from your bank account directly.
If you like to pay your balance off each month, a charge card
might suit you.
If you want to pay off your debt in instalments, choose a
credit card.
You may freely reprint this article provided the author's
biography remains intact:
About The Author
John Mussi is the founder of Direct Online Loans who help UK
homeowners find the best available loans via the http://www.directonlineloans.co.uk
website.
MORE RESOURCES:
Credit - Google News
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