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Using a Credit Card

Introduction

Most of us have at least one credit card. Many have more than one, as well as perhaps several store cards. Credit cards are a handy way of paying for things. But sometimes they can be too easy and, as a result, more of us are falling into debt. In this article, we will give you some advice on using credit cards and tell you some things about them that perhaps you didn't know.

What the law says

The Consumer Credit Act 1974 is the law which sets out the rules that cover credit cards. One of the least known rules is in Section 75. This says that if you use your credit card to buy something costing more than £100 but no more than £30,000, and something goes wrong, the people who gave you your card are liable as well as the seller. This covers both goods and services and extends to overseas as well as domestic transations. Please note that you do not have to claim against the seller first.

Useful information

Many large stores offer discounts or special offers on the day you sign up for one of their cards. But after that, their interest rate is usually higher than an ordinary credit card. Think twice before you get involved.

As with everything, it really does pay to shop around and see which credit card is the best value for you. A lot of us get very lazy and just can't be bothered. But it really is easy to switch from one card to another. Just tell your new company to make the arrangements and they will. And if you need something to encourage you, just remember that, with your present card, you could be paying up to twice as much interest than you would with a different card.

Some credit cards give free insurance for the theft, loss or accidental damage of anything you buy with the card. This sounds good but bear in mind that the cover usually only lasts for a short period. Ninety to a hundred days is the normal.

Some cards also give you a year's extended warranty on your purchase. This means that you have an extra year's guarantee on top of the year given by the maker. This sounds good, but it's a fact that most goods do not break down in the first two or three years of use.

Travel insurance also comes free with some credit cards but these will probably also have annual fees. You'll have to decide whether it's worth paying the fee for what may only be very limited cover. Remember, there's no such thing as a 'free lunch'.

Points for things like holiday discounts and free flights is another perk used by credit card companies to get you to take their card. These can be useful, but you usually have to use your card to spend so much that it may be difficult to take advantage of such a perk.

If you have more than two cards you may lose track of what you've spent. Even with two cards, it's a good idea to keep a record of how much you spend. That way, you'll not get a shock when the bills come in.

If you can, try to repay more than the minimum amount required each month. Your debt will be reduced more quickly and you'll pay less interest.

What to do if you have a complaint

If you have a complaint about goods or services which you have paid for by credit card then contact Consumerline on 0300 123 6262 for advice.

If you feel that the credit card company is charging you too much interest, or is treating you unfairly, write to the Customer Services Manager. If that doesn't put things right, talk to Consumerline, your local Advice Centre or Citizens Advice. Some of these have specially trained Money Advisers and if necessary, they will contact the credit card company on your behalf.

If your circumstances have changed or for some other reason you're having difficulty with the repayments, seek help immediately. The problem will not go away and the longer you delay getting it sorted, the larger your debt will become. Ask for help from your local Advice Centre or Citizens Advice. Their addresses and phone numbers are in the Phone book.

From category: Money Matters