There has never been a bigger variety of Credit Cards available than right now, making it hard to choose which one, if any, are right for you. It is important that before deciding on a credit card, you are aware of the different types, as well as the potential benefits and risks associated with each.
Credit cards allow you to borrow money from a bank, building society or other lender, to allow you to pay for goods and services. You then pay back the money over a period of time with interest added on top.
This type of credit card can help you to manage your existing financial debt. These cards are used to help you consolidate debt from other credit cards, allowing you to pay off what you owe at either a low or 0% interest.
There are different options available:
This type of card allows you to purchase goods and spread the cost over a period of time. Some may offer you lower rates for a fixed period or even offer you interest free over 3 - 12 months.
Depending on the terms and conditions you can use this type of card for other purposes, such as cash withdrawals and transfering balances from other type of credit. Be aware though, this type of transactions could incur a much higher rate of interest.
If you have either a low or bad credit score, these cards are specifically designed to help people improve their circumstances.
These cards will offer you a managable limit to help you stay in control of your finances.
Failure to keep within the credit limit will cause your credit score to drop quickly, as well as leaving you with big debts.
Please note: consistently keeping up with many forms of regular payments such as household bills over a time will help your credit score rise.
Cashback credit cards operate by awarding you money back on your purchases. These cards are designed for people who clear their balance each month.
When utilised carefully, cashback credit cards can be an effective way of saving you money.
Always check the terms on their fees and interest, as some charge an annual fee.
To make the most of these cards, make sure you pay off the outstanding credit card balance on time each month so that you don't get charged interest and erase any potential cashback you've earned.
For more information on the different types of credit cards, as well as pros and cons of each, click here.