If you’ve already had several UK credit cards over the years, you might feel pretty well versed in them. But things are always changing, so it never hurts to brush up on the basics. On the other hand, if you’re just trying to get your credit life off the ground as a UK resident, then this guide may have much more meaning for you. The truth is that you will have to really amok sure that you have things taken care of in the grand scheme of life. This means that you nee dot enter the world of credit with an open mind, and make sure that you have enough information at all times. Just signing your name at the dotted lien and using a credit card can get you in a lot of trouble.
The first thing that you need to think about is the overall interest rate that you’re going to be paying. Keep in mind that many credit cards have multiple interest rates depending on what the money is derived from. There is an interest rate for balance transfers, one for new purchases, and one for cash advances. Knowing which interest rate applies to what is very important. Another thing that you will need to address is what amount of your payment goes to what “pool” of borrowed funds first. You might use a cash advance and then purchase new things, not realizing that you will have to make sure that you focus on the highest interest balance first. Every credit card is going to address this in a different fashion, so don’t feel like one size fits all here. That’s why it’s so critical that you look at the terms and conditions before you eve use the card.
Your due date also matters. There should be a grace period involved where if you pay before a certain time, there is no interest applied to the account. This is something that a lot of people don’t think about, but it’s a good way to make sure that all of your credit cards are truly interest free cards. But a lot of people don’t have the discipline to do this — will you be different? There’s only one way to find out, of course.
Think carefully about what type of credit card you get. Rewards credit cards are nice, but they have separate terms and conditions that may be in a different brochure. Be sure that you read all of the terms including the rewards boundaries. You may not be spending enough on your credit cards to really rack up any real rewards — but the promise of reward is often what gets people to sign up in the first place!
These are just a few things to think about when you start thinking about UK credit cards! Good luck finding your first one!