Thinking of getting your first credit card? Here are some things to consider.
Credit cards can help you manage your money by spreading the cost of your everyday spending and providing a secure way to pay.
Credit cards are typically used for short-term borrowing for everyday shopping such as groceries and petrol, or for larger purchases such as holidays or a television. A credit card can even be used to consolidate balances from other credit and store cards.
A credit card issuer will run checks on your credit file to see if you can afford to pay back what you borrow on your credit card. This is called a credit check. If you’ve previously had problems paying back your debts then your credit file may be affected. If you think this might be the case, you can contact a credit reference agency and ask to see your credit file.
A Credit Card is not suitable for long term borrowing and a loan may be more suitable.
Like debit cards, you can use credit cards to buy goods in shops,
over the phone and online. The process for making a payment will differ depending on how you do it:
You can use a credit card abroad to make purchases. Look out for the MasterCard®, American Express® or VISA logos depending on your card type.
Most card issuers will charge you a fee to change your purchases from foreign currency back to sterling.
You can also use your card to withdraw cash at a cash machine, bank branch or buy foreign currency (normally called a cash advance). Most credit card issuers will charge you a fee for this and the interest rate for cash transactions is usually higher than the rate for purchases and is typically charged immediately – if you’re not sure you should check your terms and conditions.
Credit cards are covered by Section 75 of the Consumer Credit Act 1974.
Under the act, a credit card issuer and the retailer have joint responsibility for your purchase if there is a breach of contract or misrepresentation – for example, if the item is faulty or the company goes bust before you receive your goods. Plus, Section 75 can even give you protection for any costs that you incur as the result of the breach of contract by the retailer.
Certain conditions have to be met for Section 75 to apply, for example, the purchase needs to be over £100 and under £30,000.
Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority except for lending where we are licensed by The Office of Fair Trading. Authorisation can be checked on the Financial Services Register at www.fca.org.uk. Lloyds Bank plc is a member of the Financial Services Compensation Scheme and the Financial Ombudsman Service. We subscribe to the Lending Code; copies of the Code can be obtained from www.lendingstandardsboard.org.uk.
Lloyds Bank plc Registered Office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 2065.