Top-of-the-line perks of using a bank card is the protections afforded under Section 75 of the Consumer Credit Act 1974.
Transactions between £100 and £30,000 are covered by the Act, which helps you to raise a claim for a breach of contract or misrepresentation by the supplier of products or services.
Meaning when you bought something using a bank card and it didn’t arrive or wasn’t as advertised you possibly can make a claim. Crucially, your credit provider can also be responsible (in addition to the retailer) if something goes fallacious, so you might be in a powerful position to get your a reimbursement.
What is going to I be using my bank card for?
There are different cards for various uses, so it’s essential to take into consideration what you’re going to use the cardboard for.
James Daley, of consumer group Fairer Finance, says if you wish to transfer a balance from one other card, it is advisable to be taking a look at the longest period you possibly can get a 0pc deal for, but additionally maintaining a tally of the fee.
“There are cards that don’t charge any fee in any respect, but obviously they have a tendency to have shorter interest-free periods,” he says.
“There are cards with longer periods, of over two years, but they have a tendency to return with a fee of 3pc or 4pc, sometimes higher.”
Should I get a bank card or a loan?
Bank cards will be cheaper than taking out a private loan, however the 0pc interest period tends to be shorter.
Daley says: “Taking out a loan is healthier for where you’re thinking that you’re going to wish longer to pay it off and it’s a much bigger amount, like a automotive, for instance, or another significant purchase.
“Bank cards will be really good for modest amounts of borrowing, which you’re thinking that you’re going to find a way to pay back over a few years, like a vacation.”
Is my authorised overdraft cheaper than getting a bank card?
Your authorised overdraft is sort of never cheaper than getting a bank card, Daley says.
There are banks which have a small interest-free overdraft, like £100 or so, but most overdrafts will charge interest of 25pc to 40pc.
Daley says: “They have an inclination to be far more expensive ways of borrowing over the long run, so that they’re really only good for short-term amounts of borrowing.”
For instance, when you’re paid your salary on the primary of the month, and have run out of cash on the twenty fifth, an overdraft can make it easier to fill the gap before your next pay cheque.
Nevertheless it’s not going to be a superb technique to borrow any significant amount of cash for the long term.
An exception to the rule is for college students, who are likely to be offered greater overdrafts and longer interest-free periods.
Can I make repayments?
Daley recommends having a plan for paying off your debt. It will be important to repay the bank card balance in full by the top of the interest-free period.
Otherwise, you possibly can get charged sky-high interest. Those that fail to repay their balance are being stung by the very best rates on record, in accordance with financial analysts Moneyfacts.
The common purchase rate of interest (APR) on a bank card stood at 34.6pc within the last quarter of 2023 – a 4.3pc yearly rise.
Rachel Springall, finance expert at Moneyfacts, says that “over the past quarter, the common APR has been fuelled by a mixture of rate of interest rises, card fee rises, withdrawals and the scale of fees on latest cards launched”.
Organising an everyday direct debit can make it easier to repay the balance and avoid missing payments.