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Tips on things to know about credit cards

CREDIT CARDS can be a saving grace for big purchases, but they can also be a minefield for financial peril.

Cash flow has teamed up with finance comparison site to help readers compare the best deals on credit cards, loans, mortgages and insurance.

Tips on five golden rules to consider before you splash out on plastic.

1. The rate you see might NOT be the rate you get

Card firms must advertise a ‘Representative APR’.

This is the annual rate of interest but it only has to be given to 51 per cent of people offered the card. So nearly as many could be charged a higher rate.

Don’t let this catch you out.

2. Make a payment every month

Credit cards enable you to buy something and pay for it over a number of months. This doesn’t mean you can pay a bit off now and then when it suits you.

You must pay something off the balance every month. Miss a payment and you’ll be charged a penalty fee of £12. It could also harm your credit score, making it harder to borrow in the future.

3. A credit card can slash the cost of existing debts

Credit cards aren’t just for spending on they can also be good for those trying to clear debts. If you are being charged a hefty rate of interest on a credit or store card debt switch it to a zero per cent balance transfer card.

4. Poor credit rating? You won’t get the best deals

The leading zero per cent card offers are only available to those with perfect credit histories. If you’ve had problems managing money in the past there is no point in applying for these cards as you’ll be rejected.

There are cards especially for those with bad credit scores or who have never had a credit card before.

5. You get extra protection if you pay with a credit card

If you buy anything costing £100 or more, paying with a credit card gives you extra protection over cash, debit cards or cheques. If the retailer goes bust or your goods are faulty you can claim a refund through the card provider.

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