A Look at Credit Cards in the UK
The credit card has become a staple part of many people’s financial lives. Many take it as standard practice to pay for anything as substantial as a tank of fuel for the car, or the weekly shop by credit card.
In doing so, what they have done, in effect, is to borrow money from the card provider (which is usually a bank), under agreement to repay after an agreed time limit.
Alternatively, there are those who only wish to pay as they go, to keep an eye on their own finances, paying by cash or by debit card, to avoid being “in debt”.
The disciplined user of credit cards is way in front here, effectively using the bank’s money for purchases for which you get the bill at the end of the month, and provided you pay the bill in full, you pay no interest at all.
This means that you have “borrowed” the banks money for up to around 6 weeks, before paying it back with no interest whatsoever.
Should you only pay a proportion of the total monthly bill, then of course, interest will be applied, and it can, in some cases lead to a debt spiral, should you continue to add to the amount.
The one place a credit card really should be used is in your financial transactions over the internet. Online shopping has become the norm for many of us with our smart computers fired by fibre optic connections, and the credit card is for almost all of us the most practical and prudent method of buying.
The credit card comes with built in protection courtesy of the Consumer Credit Act, meaning it protects the buyer for purchases of from£100, to £30,000, should something go amiss with transaction.
This could cover such diverse problems as, goods that never arrive, or are broken, or even just not up to the standard which was claimed when selling it.
It can cover a situation such as, booking and paying for a holiday or flights, and the holiday company or airline subsequently going out of business, your credit card company will still refund you.
This cover is not an optional extra, but comes automatically with the card. This is something that debit cards cannot do. The inherent danger of using your debit card online is that should it be scammed, it allows the criminal access to your bank account.
It is nice to know you have a “safety net” whilst shopping online, but some security problems can be avoided by remembering the old adage, if you are offered a deal that seems too good to be true, it probably is, click off, move elsewhere.