Avoiding the Credit Card Traps

When using your credit card, there are a number of traps you should avoid to ensure that you don't pay over the odds. These include:

Drawing Out Cash

Don't use your credit card to get cash. There is usually a minimum charge of £1.50 or £2 for making the withdrawal. Interest may also be charged - at a higher rate than on purchases - from the date of the withdrawal. The best way to avoid temptation is to destroy your credit card personal identification number (PIN) without looking at it.

Credit Card Cheques

Don't use the cheques that several card companies issue alongside their cards. Writing a credit card cheque is like making a cash withdrawal, and attracts the same sort of charges and interest. Using a credit card cheque rather than the card itself also means that you lose the protection of the Consumer Credit Act.

Store Cards

Be wary of credit cards offered by shops and large retail groups to be used exclusively in those stores. Store cards are usually an expensive way to borrow.

Monthly Interest Rates

Don't be taken in by what looks like a low monthly interest rate. A monthly rate of 2.2% translates into a yearly rate of nearly 30%. On a debt of £500, this would mean paying approximately £150 in interest.