Is a credit card a suitable option for me?

Credit cards can prove to be a useful payment tool for a wide range of customers to call upon. The use of such products - in addition to pre-paid cards - offers a handy way to fund purchases or meet pressing financial commitments and as such may enable you to realise a range of ambitions.

Indeed, if you're hoping to fund a major purchase - perhaps an extra-special birthday present or you are buying gifts for loved ones in the run-up to Christmas - but simply don't have enough money in your current account to do so, a credit card can help you to go ahead and make that acquisition.

It is also worth bearing in mind that under section 75 of the Consumer Credit Act 1974, you will be covered for any online purchases made using your plastic that are worth more than £100. In the event you buy something over the internet, but the supplier cannot provide it to you or issue compensation, you'll be able to make a claim from your credit card company so that you do not end up out of pocket and without your possessions.

A credit card can also be useful to have in your wallet or purse to help deal with financial emergencies. If your home or car unexpectedly needs urgent repairs but you won't have the cash in your bank account to meet these costs until your next payday - which could be several weeks away - you can use your plastic to finance this.

No matter what reason you may have for wanting to use a credit card, it is important to remember that you will be charged interest on your debts.

Consequently, it is a good idea to always try and clear off your balance in full each month. While it is possible for you to pay less than this - and credit card providers will always highlight the minimum amount that you can repay - doing so will see interest and potentially other charges added to your balance, which will only increase the overall amount you owe.

You should also remember to try and stay within the confines of your credit limit whenever possible. This is specified by your financial services provider and by exceeding this amount - for instance, if the interest you are charged takes you over the threshold - you will be hit with an additional fee.

If you are confident that you will be a position to repay the money back that you borrow in a timely fashion, you may want to consider applying for a credit card. You should also bear in mind that you will have to meet certain criteria in order to get one. This varies from lender to lender and you'll discover that some companies will demand you earn over a specific amount of money before you can take out a card.

While the legal minimum age that you can own a credit card is 18, certain providers will only issue their products to those over the age of 21.

However, it is worth bearing in mind that the tense economic climate of recent years has made it difficult for those with a less than perfect financial history to obtain a credit card.

As such, it is worth bearing in mind that on certain occasions it may be better for people to use other products.

One option you may want to give consideration to is pre-paid cards. Performing in much the same way as top-up mobile phone cards or pre-paid gift cards, you load up money on to your card using the cash from your current account, which you can then spend at a later date.

As you're using money that you already have as opposed to borrowing it, they could be a useful choice for those who simply cannot get a credit card.

Like credit cards, these can be used to purchase goods online and with companies such as Visa and MasterCard among those to supply pre-paid cards, you can use them to fund purchases all over the world.

By spending some time considering your personal circumstances and comparing the array of cards that is on the market, you can be confident that you will be able to take out the product that is right for you.

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Moneyextra.com recommends you take independent financial advice before acting on any article

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2011-10-20 12:08:23 © Moneyextra.com