Loans Choice
www.loans-choice.org.uk
An instant Pay-day loan gives you a quick source of ready cash.
A homeowner loan is a type of secured personal loan.
A tenant's loan is a cheaper type of unsecured personal loan.
Even supermarkets can give you a cheap unsecured loan.
They are used to fund courses to develop job skills.
Car loans need not be provided by the dealer.
Debt consolidation loans can be dangerous.
Equity release schemes are also called Seniors Loans.
An Individual Voluntary Arrangement is an alternative to bankruptcy.
A remortgage can release cash for car purchase.
AER or Annual Equivalent Rate is used for savings accounts.
Repair, update and check your poor credit rating for FREE.
A top-up credit card is useful for students.
Credit Cards in the UK
Pre-paid Debit Cards
Pre-paid debit cards are sometimes called pre pay credit cards or pay as you go credit cards. Although these cards can be used just like credit cards they do not provide credit; you can only spend whatever amount you have previously topped it up with; just like a pay-as-you-go mobile phone. You will almost certainly qualify for a pre-paid debit card even if you have a bad credit history or don't have a bank account.
This type of card can be useful for teenagers and they are safer to carry around than cash and are ideal for making purchases online. However, they are more expensive to use. All providers will make charges, typically; a charge for the card, a charge to top it up, a charge to take money out at a cash machine, and a charge, usually a percentage of the purchase price, when you use the card. Each card company has their own ideas where they levy these charges, some items will be free some will be charged for. The way you use the card will determine which one you choose. For example if you are going to top up the card frequently with small amounts or withdraw small sums freqently at cash machines, you would be better selecting a card where these charges are free.
Standard Credit Cards
Credit cards are undeniably useful but they make it very easy to get into serious debt. If this is the case please read our Bad Credit Loans page first. Even if you have an adverse credit loan history it is still possible to apply for a credit card.
Credit cards should only be used for small or very short term loans. Their rate of interest is nearly always considerably higher than most other types of loan. Never buy a high priced item such as a car using a credit card. For example, if you have built up a £3,000 debt on a credit card and you only make the required minimum payment each month, it will take approximately 30 years to repay the loan in full, and in that time it will have cost you nearly four times (£12,000) the original sum. A personal or other specialised loan (see Car Loans) is usually much cheaper.
However, providing that you are able to settle your credit card statement in full, and you have a sufficiently high credit limit, you should not be afraid to use your credit card when making a large purchase. If you make the purchase at the right moment you may get up to 56 days free credit before you need to settle the account. But remember you must be able to settle the balance in full at the appropriate time to avoid paying the very high interest charges that apply to credit cards.
If you need a credit card and you have a bad credit record, try applying for a Barclaycard as they use a risk based credit scoring technique to each application and apply an interest rate according to your own circumstances. You will also get standard features such as free purchase protection and points when ever you use your card. For help with bad credit see also our Bad Credit Loans page.
Interest Free Credit Cards
Banks find the credit card industry very profitable so they are keen to get your custom. For this reason many will give you an interest free credit card if you move your debt from your existing card over to theirs. This is known as a balance transfer. Be cautious about these deals. You often find that when the 0% deal finishes you end up paying a higher rate of interest than you did before, and not only that, they usually charge you the higher rate of interest on any new purchases while the 0% deal is in force. Generally, if you transfer a debt to another card, do not use it for new purchases until the outstanding balance has been fully paid. For example, if you transfer a balance of, say £1,000 at 0% interest and purchase new goods to a value of, say £1,000 at 14% interest then anything repaid will be deducted from the transferred balance and you will continue paying interest at this high rate on the full value of the new purchases until the full amount of the balance transfer has been paid.
To summarise, credit cards can be very useful and convenient when used for short term credit. They have the advantage that payments for purchases that are found to be faulty can be reclaimed from the credit card company as long as they are between £100 and £30,000. In other words your consumer protection is generally much greater than if you make payment by cash or cheque. Because of this protection, online payments made over the internet are much safer when made by a credit card. Note that it must be a credit card and not a debit card and that the transaction must be with a UK registered credit card and a UK registered website. Credit cards also have the advantage that borrowing on them is unsecured.
Always read the small print of the agreement for exact details relating to your own credit card account. Conditions vary from bank to bank. If things go wrong and you are unable to keep up the minimum repayments, you may be taken to Court and end up with a County Court Judgement against you. This is a serious matter that may prevent you getting cheap credit in the future but your home is not at risk of being repossessed.
Apply for credit card only if you are confident about dealing with the problems outlined above and remember not to exceed your credit limit.
Please Note: Your Application for a Credit Card May be Refused.
Banks are not duty bound to issue you with a credit card. They can refuse to issue one if they want to.
But why would they do this? Even people with a perfect credit rating are sometimes refused! The reason is that the banks make the most profit from those who spend up to their credit limit and only pay the minimum required payment each month. This is something you should never do.
The best way to use a credit card is to pay off the full amount each month effectively giving you up to one month's free credit. If you do this the bank will not earn anything from you but they will get a percentage of the amount you spend from the retailer who sold you the goods.
So if you pay up the credit card balance in full each month and spend very little the bank may consider you are not worth the bother and refuse you a card even if you have a good credit rating.