Uk Credit Card Companies

Written by Ingrid Chen
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Many capitalist economies, such as the US and the UK, rely largely on credit to keep the financial markets running smoothly. In the financial sense of the term, credit refers to an amount of debt or loan created by a lender and given to a consumer in order to help make certain purchases or to establish a personal fiscal history. It would be nearly impossible for the average homeowner to obtain a mortgage were it not for credit extended by lenders to help make such significant purchases.

There may come a time in every individual's financial history where one's credit rating can affect the outcome of a major purchase or decision. Many individuals have experienced such financial anxieties at some point in their lives. Some people turn towards credit as a financial saving grace; however, professionals commonly recommend choosing credit wisely. Any steps you take in buffering your financial future will affect your credit history in the long run.

Establishing Credit Effectively

The most common way that consumers today begin to establish credit is by applying for credit cards. 55 percent of the 121 million credit card holders in Western Europe reside in the UK alone. With such burgeoning business, UK credit card companies commonly offer great introductory deals and low rates in order to compete for the attention of the ever-so-thrifty consumer.

UK credit card companies usually fall into three categories: "high street" (commonly-known) banks, online banks and supermarket banks. If you are new at building credit, it may be easier to start off with something such as a supermarket bank, as these credit cards tend to be aimed towards smaller purchases and have fees more reasonable for average spenders.

How do I Compare Credit Cards?

The interest rates and fees should be the first thing to consider when comparing credit cards. The annual percentage rate (APR) applies towards the balance carried over month-to-month on a credit card. Finance charges, on the other hand, may apply towards individual purchases. Some businesses charge fees simply for allowing you to make a credit purchase with them.

Attractive introductory rates of interest often apply for first-time cardholders. This period of zero or low interest usually lasts for the first six to nine months, depending on the company. Before you apply for any of these tempting deals, keep in mind that once that period expires, certain interest rates and fees will begin to apply towards your credit balance. There are tables available online that can help you determine what card is best for you.

Financial professionals will often urge consumers to never "max out" a credit card (hit or overspend the credit limit), or to even come close. The closer one gets to a credit limit, the more risk he or she takes with a poor credit history. The idea is to carry as little debt as possible. For many of us, this is simply not credible; however, try to stay on the low end, 30 percent or below, of the credit limit. Smart credit card consumers will use credit to fund wise long-term investments, rather than spontaneous purchases that one simply doesn't have the funds to pay for.

How Credit Affects Your Financial Future

Every fiscal step you take becomes a mark on your credit history, and keeping that history clean will benefit you hugely in the future. Don't be tempted to "card surf," which is applying for a new card and transferring the card balance after the zero-interest period is over on your current card. While this may work for some people as a short-term fix, it requires careful attention and high maintenance. Not all cards are the same, and changing the rules frequently can be confusing and risky.

If you know your credit history isn't the best, don't be fooled by "credit wizards" who will claim to fix your credit overnight. More often than not, these fraudulent businesses will scam individuals out of large sums of money with no positive results. Instead, take wiser steps such as applying for a secured credit card, which is essentially the process of proving your trustworthiness as a borrower by borrowing against your own finances. In the long run, being smart about your fiscal choices will lead to great personal and financial gains.

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