According to articles like this from The Week, the amount of UK credit card debt is ‘growing at its fastest rate since before the financial crisis’, currently standing at around ‘£70bn of the UK’s £200bn personal debt total’.
These numbers are also increasing, which suggests that the country’s credit card users perhaps aren’t as well-versed in debt management as they should be. At the same time, it could also be the case that those using credit cards didn’t fully assess their financial circumstances before they applied for one.
So, to help redress the balance with this, below you can find a number of important things to consider and check before applying for a credit card.
The APR — or ‘Annual Percentage Rate’ — is basically the cost to you of borrowing on your card. This percentage can vary depending on the lender and your credit score and is something you should discuss. However, this interest can be avoided with some cards by simply paying your balance off every month.
The Repayment Options
Paying off the balance each month is one option, but if you can’t manage this there are also other repayment options and plans you can have with your credit card. Often you will have a minimum repayment amount which you may need to negotiate before you get the card.
The Fees and Charges
You should also ask a potential provider whether they have any fees and charges on their credit cards. These can include annual charges for using the card, charges for exceeding your credit limit and fees for any late payments.
The flipside to the above is to find out if there are any benefits on offer with the credit card that piques your interest. Some cards come with lower introductory rates and other perks like cashback and loyalty schemes that see you accrue points, depending on how often you use your card, which you can then turn into rewards.
If you’re ever in any doubt about applying for a credit card, it’s also a good idea to:
- Research and shop around using comparison sites.
- Seek expert support from a financial advisor to help you pick the right card.
- Consider and explore alternative sources and providers and other finance options.
- Learn more about budgeting and managing your money.
With a better understanding and the above guidance and considerations, you should hopefully be able to decide if a credit card is right for you and which type of card best fits your circumstances.