Credit cards can be confusing if you donâ€™t know much about them. The answers to these Frequently Asked Questions should help.
1. What is a credit card? A credit card a small plastic card which can be used to pay for things. When you buy something with a credit card you are borrowing the money and need to pay it back to the lender at a later date. You only pay interest on the money spent after a fixed term and if the balance is not paid off in full each month.
2. What are credit card interest rates? A credit card interest rate is a percentage used to work out how much the lender charges you for borrowing from them.
The higher the interest rate the more you will be charged. You are only charged interest on your outstanding balance.
3. What is a balance transfer? A balance transfer means moving the debt from one credit card account to another. It is common for people to move their credit card debt to take advantage of special deals such as cards with 0 balance transfer. These cards allow people to move their debt and avoid paying interest on it for a fixed period of time.
However, there may be a fee to transfer your balance (typically 3% but can be lower).
4. What is credit card cashback? Credit card cashback is a type of reward scheme. When you spend money on your credit card you get a percentage of the cash back from the credit card company.