This advice applies to Northern Ireland. Change country
This information tells you about the main types of plastic cards which you can use to buy things on credit. Credit is another word for borrowing. When you borrow money or get credit, you have to sign a credit agreement. This is a legal document which sets out what you and the lender are agreeing to.
There are other types of plastic card, for example, debit cards and prepayment cards which are not credit cards. When you buy something on these cards you are using money which is already in your bank account or loaded onto the card.
You can get a credit card from banks, finance companies and larger supermarket and store chains. You can spend up to your credit limit. If you pay off the total amount by the due date, you will not be charged interest. If you don't pay it off, you may be charged interest on the amount outstanding. The amount of interest varies between providers so shop around for the best deal.
If you go over your credit limit the provider may charge you a fee and some also charge an annual fee.
Credit cards can be used to buy goods anywhere, including over the phone, online or by post.
For more about comparing interest rates see Getting the best credit deal.
For more information about choosing and using credit cards, see Credit cards.
Many shops have their own types of credit accounts known as store cards. There are two main types of account:
- monthly account where interest will be charged if the amount is not paid off in full at the end of the month (like a credit card)
- budget account where you pay a regular amount each month to cover the cost of goods bought throughout the year (like a loan).
Store cards can usually only be used to buy goods in the store that issued the card or its partner stores.
Many store cards offer discounts on goods in the shop. But the interest charged can be higher than on bank loans or credit cards so always check which is cheaper overall.
Don’t confuse store cards with store branded credit cards which can be used anywhere, not just in the named store. You can find more information about store cards on the MoneySavingExpert website at www.moneysavingexpert.com.
Charge cards are different from credit cards because you have to pay off the amount you borrow in full at the end of the agreed period, usually each month. Interest is not charged on the amount you borrow but you may have to pay an annual fee for the card.
For more information about different ways of borrowing money and getting credit, see Types of borrowing.
You may also find the following Adviceguide information helpful:
- Getting the best credit deal
- Credit cards
- Banks and building societies
- Help with budgeting
- Help with debt in England, Wales and Northern Ireland
- Help with debt in Scotland.
The Money Advice Service
The Money Advice Service is a free, independent service. Their website (www.moneyadviceservice.org.uk) has lots of useful information about borrowing and managing your money.
Go to their website for more information about: