May 29, 2022
Understanding Credit Cards in the UK

Understanding Credit Cards in the UK

 

Credit cards can be an excellent way to build your credit history and improve your financial stability and future borrowing ability, but they can also be harmful if you don’t use them correctly. If you’re new to the credit card game in the UK, it’s important to learn about everything from credit card fraud to handling interest rates before getting started. Let’s take a look at how credit cards work in the UK, starting with the basics.

Knowing your Credit Score
In Great Britain, your credit score is kept by each credit card issuer (Visa, MasterCard, etc.). They do not share their scores with one another; instead they rely on a central credit reporting agency (Equifax or Experian) to keep track of all users’ histories. Additionally, FICO doesn’t have access to UK scores. You can find out if you have a good or bad score but not what it is exactly.

Types of credit cards available in the UK
There are basically two types of credit cards available in the UK: charge cards and revolving credit cards. A charge card is a payment method that requires you to pay your balance off at a certain time (often 30 days). You can only borrow money if you have enough saved, so it’s very much based on self-control. It’s quite similar to paying with cash, which is why these cards are also called pay as you go credit cards.

What Happens if you Stop Paying your Credit Card Bills?
One of the biggest mistakes you can make is to not pay your credit card bills on time. When you do so, you get slapped with a late fee and then your interest rate can increase (depending on your lender). But what does happen if you stop paying entirely? In most cases, nothing, at least for a while.

The Different Types of Credit Cards
If you’re looking to apply for a credit card in England, there are three types of cards: charge cards, unsecured credit cards and secured credit cards. Each has different benefits and limitations; therefore, it’s important to understand what you want before making your decision.

How Can I Get a Low Interest Rate Credit Card?
When it comes to getting a credit card, you should definitely shop around and get a low interest rate. When you first apply for a credit card, there will usually be an offer of some sort (e.g., 0% interest on balance transfers for 12 months). Always take these offers when they are presented; however, it can be hard to tell which cards have them or what kind of conditions are associated with them.

Debit, Charge, or Credit?
So, which is it? Are we talking about debit cards or credit cards? The answer depends on what country you’re asking. In America, most people refer to their plastic as a credit card—meaning it charges purchases over time and users can pay with it again later, if they want. In Europe and elsewhere, credit cards are actually charge cards—meaning that users must pay their balances off at each payment period.

To apply or not to apply – that is the question!
You may be wondering whether or not you should apply for a credit card – and if so, which one. Before making any application, it’s important to research your options thoroughly so that you can get an idea of what type of credit card will suit your lifestyle best. Depending on your situation, you may want to use a credit card for certain transactions or purchases over others. Once you’ve identified how and when you want to use your card, it’s time to start applying.

Tips on how to use your credit card responsibly
If you’re new to credit cards, or even if you’ve had one for years, it can be tough knowing how to use them. To make sure your credit card doesn’t become a liability, start by using it responsibly—and then only charge what you can afford to pay off each month.

5 thoughts on “Understanding Credit Cards in the UK

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