Tuesday, July 07, 2009

Borrowing on a Credit Card

One of the easiest ways to borrow money of a financial institute is to utilize a Credit Card, available from all banks, edifice societies, and other financial organisations. The picks available are enormous, with a broad assortment of interest charges, annual charges, loyalty schemes, and fillip points available. However there are two wide countries that you should look at:

Annual Interest Rate

Firstly if you make not mean to pay off your Credit Card measure astatine the end of each month, then you should look at the Annual Interest Rate (APR), this rate is typically between 13-17% at the moment, and you should be looking for a card that offers as low an interest rate as possible. You should also bear in head that you are charged much higher rates of interest than other word forms of borrowing money, so if you make not mean to pay of your measures for a long clip period of time, then you should seriously see a different word form of loan that is less expensive.

Extra Benefits

On the other manus if you make mean to pay off you credit card measure at the end of each month, then you should be more than interested in the loyalty strategies that are on offer. These change from being awarded points every clip you purchase something (these points can than me used to purchased gifts or air miles etc), to simply being given ‘Cashback’ on everything you purchase (typically 0.5%-1% of your purchase). You should also look at the degree of service that your card company offers. They are obliged under law to offer certain protection to the consumer, but often they will increase this protection with other guarantees. Some offer extended guarantees on electrical goods, extra travel insurance when you are on holiday, accidental damage insurance for any commodity you buy, and even free committee on cash backdowns when abroad.

Also some companies charge an annual fee for using their card (especially business credit card accounts), so these fees should be weighed up against the cards benefits.

Even if you usually make wage off your credit card measures at the end of each month, when you open up a account you may be offered 6 calendar months interest free credit. This is often an first-class manner of economy money as you are basically given an interest free loan for 6 months. It is even more than utile if you are allowed to transfer some credit card debt from a different company into the interest free offer. However there is a danger of becoming trapped in a bad debit entry rhythm here, transferring your debt from card to card until it is completely unmanageable. The best advice is to do certain you always have got adequate money in the bank, or in a nest egg account, to pay off your debt when you are taking advantage of the interest free credit period. That manner you profit from earning interest on your nest egg in your bank, but as soon as the interest free credit time period have expired, you can pay the full measure off without being stung for high interest charges.

So to summarize

If you are not paying off your monthly credit card bills, expression for a card that offers a low interest rate

If you are paying off your monthly credit card bills, looking for further card benefits

Interest free credit time periods are good intelligence for economy money, but mind of being caught in a debt spiral

Credit Cards are an expensive manner of obtaining a loan or borrowing money, and you should look into other cheaper word forms if you mean to borrow money in the medium to long term.

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