A Beginners Guide to Credit Cards

If you are new to the world of credit cards, then it pays to familiarise yourself with the way they work before you go on any lavish spending sprees. Arming yourself with the necessary knowledge can prevent you from slipping too far into the red. Remember - falling into debt is easy; getting out of debt isn't!

Credit Limits
Card issuers will place a limit on the amount you can spend; going beyond that limit will probably mean that the card will get refused when you next try to use it. However, some credit cards will allow you to spend over your limit, but be aware that you may be penalized with extra charges if you do.

If you have proven to your issuer that you can use credit cards responsibly, then your credit limit will probably be increased. If your limit is too high and you're struggling to keep up repayments, then it's wise to inform your issuer. They will then reduce your limit, so it's then less of a struggle to keep up repayments.

Payments
If you are only repaying the minimum on your card each month, then interest will begin to accrue on your unsettled balance. It is therefore in your interest to clear your balance completely at the end of each month. This avoids you paying any interest on the amount you borrowed.

Protecting you Payments
Taking out account Payment Protection Insurance (PPI) is something lenders encourage people to buy before being issued with credit cards. PPI assists you in keeping up with your monthly repayments in the event of you not being able to work because of redundancy or illness.