Confused about credit cards? We’ve put together 10 facts to enlighten you about your plastic.
1. Consumers spend more than £5,000 every second on credit cards
Every second, 91 credit card transactions are made by UK consumers, worth £5,429, according to debt advice service the Money Charity. Every day, almost £8 million is spent on credit cards in total.
2. The average household credit card debt is over £2,000
The average Brit household has £2,292 worth of credit card debt, while total consumer credit debt rose by £203 per person in the last 12 months, the Money Charity says.
3. Some 58% of credit card balances are charged interest
Interest payments are the bane of many credit card owners. Currently, 58% of credit card balances charge interest.
If you’re stuck paying interest on an outstanding balance, you might want to consider switching to a 0% card if you can.
The best 0% deals are usually reserved for people with a top-notch credit history, however.
4. You can pay off your overdraft with a credit card
You can use your plastic to pay off your overdraft and avoid interest charges from your bank – this is known as a money transfer.
A handful of providers allow this, but the main one is MBNA.
But bear in mind, it’s only worth paying off your overdraft with a card if the card charges less interest.
5. Almost 19 million airline credit card transactions were made in 2014
Last year, people used credit cards 18,937,453 times in the UK to make a purchase with airlines, according to the UK Cards Association.
If you regularly spend significant amounts of money on air travel, you may want to consider a credit card that rewards you for all of this spending.
6. Credit cards can offer you protection
Section 75 of the Consumer Credit Act 1974 applies when you buy goods or services that cost between £100 and £30,000 and pay with a credit card.
The card provider is jointly liable with the retailer or service provider if the goods or services are faulty or not delivered.
This provides an additional layer of legal protection for consumers, and is a real benefit of paying by credit card, rather than by cash, for higher-value transactions.
7. MBNA is the biggest UK credit card company
Only a few companies own the hundreds of credit cards on offer.
MBNA is the biggest UK group, providing its own range of cards as well as a host of building society and affinity cards.
It’s crucial you know which company owns your card, and which other cards that company owns too, if you want a balance transfer card. This is because often you can’t move a debt within groups.
So if you have a Barclaycard, for example, you cannot transfer your balance to another Barclaycard.
8. Credit cards can charge you extra overseas
Many credit cards charge foreign transaction fees when using them outside of the UK.
These can be around 3% and soon add up during a holiday.
However, some cards from providers such as the Post Office are designed to be used abroad, meaning they won’t charge these extra fees when you spend on them overseas.
9. 41% of credit card holders have been offered extra credit
Nearly half of UK credit card holders have been offered an unrequested increase in their credit limit by their card company, according to research by the Debt Advisory Centre.
The average increase was £750, and more than a third of people said their limits were raised by over £1,000, according to the research.
10. Confused.com can tell you which cards you may be accepted for
When you apply for a credit card, it leaves a footprint on your credit record. And a negative application can make it harder for you to be accepted for credit in the future.