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How credit cards work

This advice applies to Northern Ireland

A credit card is a plastic card that you can use to pay for goods or services or to get money from a cash machine. Credit cards are issued by banks, finance companies, and some stores, charities and clubs. You can use the card wherever it is accepted and shops and suppliers usually display a sign telling you which cards they take.

How much you can spend

You are allowed to spend up to a certain amount on the card, called the credit limit. The amount of your credit limit depends on your circumstances.

Each time you make a purchase using your credit card the amount is added to your account. The total amount you owe is called the balance.

Interest free period

You have a set period of time during which no interest is charged, usually between 20 and 55 days. This is called the interest free period. After that, if you do not pay the full balance on time interest may be added to the account.

Some cards offer a special deal where you are not charged interest even if you do not pay the balance off in full. The credit agreement tells you what rate of interest is being charged and when it will be added to your account.

Your statement

The credit card provider will send you a statement each month. The statement shows:

  • details of each amount spent on your card since your last statement
  • details of interest and other charges added to the account
  • the amount due (the balance)
  • the date you must make your payment
  • the amount of the minimum payment
  • how and where you can make payments
  • how to contact your credit card provider

It’s important to check your statement carefully to make sure it is correct and tell your provider straight away if you think there is anything wrong with it.

Further information

The Money Advice Service website has lots of useful information about borrowing and managing your money.

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