Borrowing with a Credit Card
Is a credit card suitable for me?
A credit card gives you the flexibility to make repayments to suit your monthly expenditure. In a month when money may be short and you need to meet other expenses, for example, an unexpected bill, you could pay the minimum payment on your card for the following month.
Before you make purchases on a credit card, always think about whether you can afford at least the minimum payment. We would recommend that you can afford more than the minimum payment. If you can only make the minimum payment each month, you should think about whether a credit card is really suitable for you.
A credit card is not suitable for long term borrowing. If you are looking to purchase a large item and repay over a longer period of time a personal loan may be more suitable.
A credit card has facilities that make it more flexible than cash, cheques and debit cards when making purchases. It is a safer way to purchase goods than carrying cash. In today’s world it is almost a necessity to be able to purchase goods online to get the best deals and more conveniently shop around. When travelling, hotels and car hire companies require you have a card to secure a deposit. If you require cash, it is more expensive to take cash out on your credit card.
What does a credit card do?
You can use your card anywhere to purchase goods or services whether on the high street or online in the UK or anywhere in the World, wherever the Visa symbol is displayed. You can also use your card in an ATM to take out cash either in the UK or abroad. A credit card allows you to purchase goods or services immediately, provided that you have enough available credit on your card for the purchase. You will receive statements showing your transactions, fees, charges and any payments. You will have to pay at least the minimum payment by the date which will be shown on your statement.
How long do I have access to the credit?
Provided you meet at least the minimum payment on time each month, and stay within your credit limit, you will have continued access to the credit we provide to you.
We will always reserve the right to decrease your credit limit dependent upon how you use your card and your financial circumstances, including any other credit facilities you may have with other lenders.
We also reserve the right to close your account and if we do this we will always give you at least two months’ written notice. Please refer to the terms and conditions of your account for further information on when or why this might happen.
How much will you lend to me?
When opening your account, credit limits start at £150 and will be no more than £1,500, depending on your credit history, financial circumstances and how you are managing your current credit facilities with other lenders.
Shortly after opening your account, we will write to tell you what your credit limit is. Depending on how you manage your account and credit with other lenders, this amount may change, and we will tell you if it does.
How much will it cost me?
|Cost of Borrowing
Interest Explained – based on 39.9% APR for a purchase of £250.
|To reduce the interest charged we recommend you pay as much as you can when you can and not just the minimum payment. See the example below.|
|Illustrative example||For a purchase of £250 on your credit card|
|Monthly Payment||Minimum Payment each month||£50 each month|
|Without taking into account any introductory rates, how much interest will you be charged in the first year?||£74||£27|
|How much interest will you be charged in the second year?||£50||£0|
|How long would it take to clear the balance?||3 years, 2 months||7 months|
|The above example assumes the following: The transaction takes place on 1st January and you make no further transactions. Your statement is produced on the 1st each month and you always make the payment each month on the 15th. Your statement is produced 31 days after you make the purchase.|
If you can only make the minimum payment each month, it will take you longer and cost you more to clear your balance.
To reduce the amount of interest charged, we recommend you pay as much as you can, when you can and not just the minimum payment.
What is Repayment Option Plan?
Repayment Option Plan only applies to you if you were opted into the Plan before 19th April 2016. It is an optional part of your account with a monthly charge, with 3 features, designed to help you build or rebuild your credit. Click here to find out more.