Work & Money 

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Cards

Credit cards
A credit card lets you buy goods up to a limit before you pay for them. You usually have up to 56 days to pay your bill. If you clear your balance in full each month, you don't pay any interest on the money you've spent. But, if you don't, you'll have to pay at least 3-5 per cent of the balance or a minimum set amount and interest will normally be charged on the outstanding balance too.

Store cards
A store card lets you buy goods on credit at a chain of shops and often gives you perks like invitations to sale previews, or 10 per cent off the price of your first purchase with the card. Store cards often have higher rates of interest than credit cards, so think carefully before using them.

Budget card
With this card you pay a set amount each month into your account and get a limit based on the amount of your monthly payment. The card lets you save up to make large purchases and you may get a small amount of interest if you build up a credit balance.

Credit cards are the most common type of plastic most people use, so we'll concentrate on these.

Key pros and cons of credit cards

Pros

• Useful as a way of buying goods before you have to pay for them!
• Interest rates can be very competitive.
• If you pay off your monthly balance in full you normally don't pay any interest.
• Credit cards are accepted world-wide as well as over the phone or internet.
• Using a credit card can be safer than carrying lots of cash.
• You can use your credit card to withdraw money at cash machines - though you'll be charged for this.
• Some give benefits like air miles, points or cash back, based on the amount you spend on the card.

Cons

• For borrowing larger amounts of money for a longer period of time, an overdraft or loan may be cheaper.
• It's so easy to use, so it is very easy to run up a big credit card bill!
• If you only pay off the minimum, the interest rates can be high and you may find it hard to repay the full amount you owe.
• Some cards charge you extras, like an annual card fee.

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