Borrowing on a Credit Card

One of the easiest ways to borrow money of a financial institute is to use a Credit Card, available from all banks, building societies, and other financial organisations. The choices available are enormous, with a wide variety of interest charges, annual charges, loyalty schemes, and bonus points available. However there are two broad areas that you should look at:

Annual Interest Rate

Firstly if you do not intend to pay off your Credit Card bill at the end of each month, then you should look at the Annual Interest Rate (APR), this rate is typically between 13-17% at the moment, and you should be looking for a card that offers as low an interest rate as possible. You should also bear in mind that you are charged much higher rates of interest than other forms of borrowing money, so if you do not intend to pay of your bills for a long period of time, then you should seriously consider a different form of loan that is less expensive.

Extra Benefits

On the other hand if you do intend to pay off you credit card bill at the end of each month, then you should be more interested in the loyalty schemes that are on offer. These vary from being awarded points every time you purchase something (these points can than me used to purchased gifts or air miles etc), to simply being given 'Cashback' on everything you buy (typically 0.5%-1% of your purchase). You should also look at the level of service that your card company offers. They are obliged under law to offer certain protection to the consumer, but often they will increase this protection with other guarantees. Some offer extended warranties on electrical goods, extra travel insurance when you are on holiday, accidental damage insurance for any goods you buy, and even free commission on cash withdrawals when abroad.

Also some companies charge an annual fee for using their card (especially business credit card accounts), so these fees should be weighed up against the cards benefits.

Even if you usually do pay off your credit card bills at the end of each month, when you open a account you may be offered 6 months interest free credit. This is often an excellent way of saving money as you are basically given an interest free loan for 6 months. It is even more useful if you are allowed to transfer some credit card debt from a different company into the interest free offer. However there is a danger of becoming trapped in a bad debit cycle here, transferring your debt from card to card until it is completely unmanageable. The best advice is to make sure you always have enough money in the bank, or in a savings account, to pay off your debt when you are taking advantage of the interest free credit period. That way you benefit from earning interest on your savings in your bank, but as soon as the interest free credit period has expired, you can pay the entire bill off without being stung for high interest charges.

So to summarize

If you are not paying off your monthly credit card bills, look for a card that offers a low interest rate

If you are paying off your monthly credit card bills, looking for additional card benefits

Interest free credit periods are good news for saving money, but beware of being caught in a debt spiral

Credit Cards are an expensive way of obtaining a loan or borrowing money, and you should investigate other cheaper forms if you intend to borrow money in the medium to long term.

Alastair Taylor runs a website that tries to give the consumer the truth about how to save money on Financial matters as well as home improvement. Visit Whatprice to saves yourself time and money.

---

My Credit Card Application Was Rejected! Now What?!?

No doubt, you've probably gotten literally hundreds of credit card... Read More

How To Read Your Credit Report

The Fair and Accurate Credit Transactions Act, signed into law... Read More

Finance - Money, Money

Finance is a big word for some of us. It's... Read More

How To Prevent Fraudulent Credit Card Transactions

What Are Possible Signs of Fraudulent Transactions see at Web... Read More

A Debt Mentality

While working through my own debt situation, and helping others... Read More

Top 5 Reasons To Check Your Credit Report Regularly

#1 Make sure mistakes aren't hurting your credit.Reviewing your credit... Read More

Credit Cards And Loans - So Many Options - So Little Time

Credit Cards and Loans sounds like just two things, but... Read More

Which Credit Bureau Should I Use To Check My Credit Report?

There are three main credit bureaus in the United States;... Read More

Credit Report ? Check Yours Regularly - and for Free

In the twenty-first century, there are few documents that have... Read More

Establishing Credit ? What You Need To Know Part 2

In my previous article "Establishing Credit ? What You Need... Read More

Dealing With A Collection Agency

Step I - Selecting A Collection AgencySelecting a credit collection... Read More

Credit Score: The Brightest Feather In Your Financial Cap

Credit scores are the most important aspect that determines your... Read More

Credit and Loan Help for Mortgage Loans

Mortgage loans are some of the most difficult loans to... Read More

Have You Checked Your Permanent Record Lately?

As a young student I feared getting bad grades because... Read More

Searching For A Low Interest Credit Card?

These days, people need to very carefully consider what type... Read More

Collection Agencies: What Do They Do?

Collection agencies are businesses that collect past-due bills and accounts... Read More

All You Wanted to Know of Bad Credit

Martin Henderson is in a fix these days. Because of... Read More

Useful Tips When Choosing Credit Cards

Chances are you have received your share of "pre-approved" credit... Read More

Make Sure Your Credit Report Is Correct to Improve Your Interest Rates And Lower Insurance Premiums

Did you know that you could make sure to get... Read More

Credit Traps Snag Consumers

Nearly 20 years ago I worked for a small consumer... Read More

How a Credit Card Can Be Your Friend

We have all heard countless stories of people over their... Read More

Credit Cards: Pros and Cons

Sure, there are a lot of problems with credit cards,... Read More

Easing Your Financial Burdens With Credit Counseling

It is a well-publicized fact that more of us are... Read More

Always Avoid Payment Holidays

Once you've been paying off a credit card for a... Read More

New Law Provides Free Annual Credit Report

As of Thursday, December 1, 2004, one-third of Americans will... Read More

Balance Transfers Introduction

Credit card balance transfer involves using a credit... Read More

Maximizing Credit Card Rewards

We spend money every single day on many different types... Read More

Bad Checks, Bounced Checks, & NSF Checks

Negotiable instruments like checks and drafts have become an indispensable... Read More

The Truth About Credit

What you might not know about credit.Some people don't know... Read More

Low Interest Credit Cards: A Thing of the Past?

With interest rates rising, low or zero percent credit cards... Read More

Credit Scores and Loan Applications

Keep Your Credit History Clean - Remove A Negative Credit... Read More

The Exact Action To Take When You Find Errors In Your Credit Report

There are times when you may be turned down for... Read More

UPS Delivers the Goods, Your Identity

Well now we add CitiGroup and UPS to the Identity... Read More