Read this before applying for a credit card!

Credit cards can be really helpful, and they can give you flexibility and protection when making a purchase. But, with so many credit cards on the market, how do you know which option is the right one for you?

Before applying for a credit card, make sure you have the following covered:

1. Understand the jargon: credit cards can be confusing and it’s important to understand the basic terminology: 

• Annual Percentage Rates (APR): The price you pay on top of the money you borrow including interest and any fees or charges The interest rates are typically stated as a yearly rate.
• Late fees: What you'll be charged if you fall behind on paying your card
• Credit limit: This is the limit of credit you are allowed to borrow on your credit card.
• Credit limit fees: Standard fees that apply if you go over your credit limit.
• Withdrawal fees: Most cards will charge you for making cash withdrawals from an ATM using your credit card, usually around 3% of the amount. On top of this you’ll also be charged interest, typically at the annual percentage rate.
• 0% interest free period: Usually a limited time where you won't pay interest on the money you spend on the card. If you take out a card like this, don’t forget to check when your 0% period ends.

2. Only spend what you can afford to pay off at the end of the month. Other than in emergencies you should never use a credit card as you would use a debit card. Try and save it for planned, budgeted purchases so you can stay in control and avoid spending getting excessive 

3. Pay in full and on time, every time. When you get your credit card bill you can choose to pay off a minimum amount, the whole thing or any amount you choose. If you can’t always afford to pay off the full amount, ensure you pay off more than the minimum amount and don’t miss a payment!

4. Check your credit score before applying. Before you apply it’s important to understand how you are likely to be viewed by lenders so you can consider what amount, rate and term you are likely to be approved for. It’s always good to go into this with your eyes wide open.

5. Make sure you’re getting the best deal. There’s a huge amount of options available, so using a comparison site can be really helpful. Sites like MoneySuperMarket can help you look at a wide range of credit cards and compare rates as well as features. Most sites have effective calculators to show you the best card you might be approved for.

If you’re not sure if a credit card is for you, but you need to consider borrowing money, Salary Finance may be able to help you with a salary linked loan. Our application involves a soft search - which doesn’t impact your credit score - and you can use our loan calculator to get a quick sense of what you could borrow and at what rate. 

Please note if you are offered a Salary Finance loan and accept it, a hard search will then be completed which leaves a footprint on your credit file.