There are several different types of credit card: standard, platinum or gold, charity or affinity and loyalty cards. Standard cards are the most common, with Visa and MasterCard being two of the most common companies offering credit. Platinum or gold cards are generally for people of a higher income, and have other benefits associated with them. Charity or affinity cards donate a small percentage of the spent balance to a charity associated with the credit company, while loyalty cards offer incentives such as cash bonuses, air miles etc.

General advice

Credit cards can be expensive and hard to control. It is therefore advisable to keep receipts of any purchases made; mistakes are possible and receipts should be cross checked with the relevant monthly statement. If any discrepancies are discovered, they should immediately be reported to the credit card company; they will be more sympathetic to the cause the earlier that they are approached by the borrower. Most credit cards are also issued with a personal identification number (PIN) which allows cash to be withdrawn from the credit account at a regular high street cash machine. The owner of the card should always keep the credit card details and PIN separate from each other.

Rates and fees

Credit cards attract annual fees and interest charges. Interest rates are usually quite high, but vary between companies. Some companies provide interest free periods, while other companies may charge penalty payments for late payments or if the credit limit is exceeded.

Many credit card companies feature an incentive of low introductory interest rates for a limited period e.g. 6 months. This can be used to a borrower’s advantage where obtaining cheap loans are concerned, as he or she can take advantage of an introductory offer, and following expiry of the introductory period, move to a different credit card company offering a similar introductory offer. This can result in quite significant interest savings for a heavy credit card user.

Do credit cards offer any protection?

Some credit card companies offer a period of protection against goods purchased. This can include damage, loss or theft but this varies between companies. The user should keep a separate record of the credit card details and the issuer’s details, so that in the event of loss or theft, the credit card company can easily be contacted to prevent further use of your card. Protection may also be offered from the company (subject to an annual fee) by registering your card with them. This means that in the event of loss or theft, the company will deal with the matter, and provide a replacement card. Insurance may also be offered by credit card companies against card loss or theft