There’s no doubt that credit cards can be a very convenient way to pay for things. However, unlike debit cards, where the money is actually taken from your current account to pay for your purchase, spending on a credit card is essentially borrowing money to pay for your purchase and paying it back at a later date.
As you make purchases on your credit card you build up debt. This will need to be paid off by a certain date to avoid being charged interest. Failing to pay the amount off before this date could result in high interest charges. At the least you need to meet the minimum monthly repayments set by your bank each month (but don’t forget you will be charged interest on the rest of your outstanding balance so only make the minimum payment if that is all you can afford to do.)
Used sensibly, with balances cleared every month, credit cards can be a useful way to shop, helping you to build up a credit history (useful if you want a mortgage in the future) or even earn points through schemes such as Avios. Used irresponsibly, they could see you run up expensive debt very quickly. Unless you have a special deal there’ll be interest to pay on the outstanding debt, as well as penalty charges should you fail to make the minimum repayment or your repayments on time.
There are a wide range of cards on offer at the moment each with different advantages. Which is best for you will depend on your individual circumstances. Here we’ll run through the different kinds of cards on offer to help you make your choice.