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What to Look out for in the Small Print Before Taking out a Credit Card

The small print gives you the big picture. The finer details of your credit card won’t make for the most exciting reading but they often determine whether you have picked the right product for your needs.

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18 December 2008

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Credit Card Small Print

Even if you are looking for an instant decision card for a pressing reason - take a few minutes before you click that mouse.

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Reading the terms and conditions of your credit card can be boring and confusing but it will pay to take the time to know what you are signing up for.

Even if you are looking for an instant decision card for a pressing reason - take a few minutes before you click that mouse.

What’s the deal? Can you do better? Do you fully understand the responsibilities of holding a credit card in terms of card safety, money management and repayments?

This doesn’t sound like much fun but informing yourself before you use a credit card can avoid any misunderstandings about your responsibilities. If you think about why you want the card in the first place it puts you in control.

The overview

Why do you want a credit card? Determine this and it will play a large part in understanding the terms and conditions of the card. For instance, if you’ll be using the card for spending and then to paying off each month you may also desire some extra benefits such as cash back. So the small print is important. Does this particular provider offer the best rates of cash back? How do they allocate the cash to your card?

Equally if you want the card for a low or zero balance look at how the provider calculates the interest - this plays a part in how much you will be charged every month.

The summary box

Every credit card company has literature that clearly states its terms and conditions. To make life easier a standard summary box can be found as part of this, giving a condensed version of the main features of the card. This summary box has appeared on all credit card marketing since 2004 and applies to all credit card providers.

It enables the reader to compare details such as interest rates, fees and charges in an easy to read format.

What to look out for

  • Annual fees These are best avoided. Not all credit card providers charge this so look to see if your provider does and why. It is best to shop around for a card that doesn’t charge this fee.

  • Purchases. Is there a 0% offer on these and if so, when does it expire? If there isn’t, how much will you really be paying for your purchases if you can’t clear your monthly balance?

  • Interest free period. What is this – how many days of interest free do you get before you have to pay the bill?

  • Cash advances. Drawing cash on your credit card is generally considered a no-no, as there are cheaper ways to do this. But, what is the interest on cash withdrawals in case you ever needed this facility?

  • Your credit limit. What is it and do you need the full amount?

  • Default charges. What is the charge for late payments, over the credit limit and any associated administration charges?

Generally speaking, most people will be concerned with the interest rate and interest free period. But knowing if there is an annual fee is useful – why pay one if you don’t have to?

Default charges are scary and best avoided. Set up a direct debit on your card straight away to ensure that you do pay on time and never go over your credit limit.

Cash advances are also something to leave alone. It is a useful function of the card but isn’t the best way to use it.

By reading and understanding the terms and conditions of your credit card in the first place you can get the best out of this facility, which is what it is there for.

Best Buy Credit Cards

Credit Cards Balance Transfers Purchases APR Representative (Variable)
Tesco ClubCard Purchases Credit Card Logo Tesco Bank Logo Tesco ClubCard Purchases Credit Card Apply
 0%
9 months
2.9% fee
 0%
18 months
 
16.9%
Representative Example: The annual purchase rate is 16.9% p.a (variable) so if you spend £1200 your representative apr will be 16.9% p.a (variable)
Barclaycard Platinum With BT (27 Mths) Logo Barclaycard Logo Barclaycard Platinum With BT (27 Mths) Apply
 0%
28 months
3.5% fee
 0%
6 months
 
18.9%
Representative Example: The annual purchase rate is 18.9% p.a (variable) so if you spend £1200 your representative apr will be 18.9% p.a (variable)
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