With the recent news that Apple Pay needs a credit or debit card that’s registered in the US, isn’t great news for other countries but it might get you thinking about your own credit cards and the payment options open to you.
If you use any form of credit you must understand what it means and the terms and conditions that you probably signed, often without reading, when you applied for the credit card.
In this information, it will have given you the interest rate chargeable on purchases and cash withdrawals that you make on your card. It should also mention the amount they will add to your account if you are late with payments too.
These all add to the amount of money that you owe if you are not paying off the full balance each month.
Credit Card Offers And Payments
If you’re offered a deal at the time of opening the account, this is great; they might offer a 0% deal on new purchases for several months, these start at around the 6 month and can extend to 9 months.
It is important to understand if you don’t clear that balance in the introductory period, the interest they will charge you will be on the full amount that you have charged to the card and not the amount that is left to pay. If you have spent on a high-ticket purchase this can make the interest charged each month higher than expected, but the interest is at this rate until it’s paid off and this can cause a person to fall into difficulties with paying off their credit card.
It can cause the payments to rise each month and you can quickly find that you owe loads of money with little hope of paying it back. If you find yourself in this situation, contact your local Citizens Advice Bureau for help and advice.
Credit Score Is Effected By Payments
If you are looking that in the future you might need a different sort of credit, including a personal loan, then it is important that you protect and nurture your credit score. Your credit score comes from a number of different factors. The items that’s weighted the most in your credit score is your ability to pay your debt on time. If you are a late payer this will show in your credit score and on the items on your file, putting you at a greater disadvantage because a poor credit rate can affect the amount of credit you can get and the interest rate at which you pay back the money.
Therefore, whilst being late with your payment will incur a charge on your account, it can increase the amount of interest you will need to pay on future loans too. Making any future credit more expensive than it has to be.
Using credit cards is an expensive way to use any form of credit, you will pay high rates of interest. If you want to use a credit card wisely and increase your credit score and not accumulate a large debt, it is important that you make your payment on time every month.
It is possible to make smaller payments throughout the month, especially since online transfers are quick and easy from your bank to your credit card; this is great if you might spend the money put aside for the bill before the due date.
Alternatively, you might try a pre-paid credit card, this means you put the money on the card before the purchase, no money on the card will mean the transactions rejected.
Therefore, if you are going to use a credit card to your advantage pay off your bill every month. If you’re tempted with a larger purchase and a 0% deal then ensure you pay off all the debt before the end of the offer period or transfer the deal to avoid the high interest charges. What you do now will affect your credit in the future and this could mean higher interest payments and a more expensive loan or credit card.