Are you planning on buying a credit card and if this is your first attempt then you must know certain terms and details. This will help you understand the process easily and will help with operating the card. Credit cards are often termed as a risky thing, but if you are aware about the operational aspect of it, then you can use it to your advantage and manage your money well. Find more below on why to use credit cards.
Once you have made up your mind that finally you are going to buy a credit card, then you need to broaden your understanding about the various terms used and types of credit cards available. Find here an account of both, the normal terms used in credit card systems as well as the basic types of cards, one of which may be the best fit for you.
Credit card terms to understand:
APR: Annual Percentage Rate or APR is the monthly interest the credit card company charges on the balance of your card. This is a yearly interest. It is always better to pay a lower APR for which you need to be regular in paying your monthly credit card bills.
Credit Limit: Credit limit is a term used to show the total amount that is allowed to be spent through your card. It includes money for purchases, charges, interest and more. It is always advisable to stay within the credit limit or the company will charge a penalty to you.
Minimum payment: It is the minimum amount which needs to be paid on a monthly basis while you still have a balance to be paid. It is calculated differently by each credit card company. You need to check with your credit card company regarding it and the details for its payment.
Statement: Credit card statement gives all the details about the financial activities through your card. It can be purchases, payments, fees, rewards and interest. It is a good practice to keep an eye on your credit card statement.
Soft search: This kind of search is done over your credit file to check if you are eligible for a credit deal. It will not affect your credit score and so, lenders will not be able to see all the details of your file without access given by you. This works in the favour of the card holder.
Reward scheme: A plan offered by a particular store or group of stores that allows customers purchases at lower rates and price reductions. This depends on the amount the customer spends and may vary for each customer.
To know more about credit cards, check our credit card guides. For comparing various credit card companies in the UK, check our website FreePriceCompare.com or call us on 02034757476.