Credit Card Options in the UK

There are three common ways in the UK to pay for goods and services.  The most popular option being seen in the UK at the moment is credit cards, but you also have the store cards and in- store finance option.  The credit card can be obtained from any bank or building society that offers the cards.  They can also be obtained through other companies with the co- branding such as British Airways credit card.  The credit card options will vary, which is why they are very popular to many British consumers.

With credit cards you can purchase an item today and pay for it 30 days from now or whenever your next statement date occurs.  Credit cards are very handy tools to have if they are used right, but more on that later.

Store cards are a kin to the credit cards only they have been given for a specific store.  All you do is go to the store you want a card from and apply.  The application process can be a little easier for the store cards as they want more consumers to use the cards; however they have a great many pitfalls, even more than the credit card options.

In- store finance is quickly becoming something of the past.  In store finance has been a way to purchase big items like furniture when you don’t have the money.  It is like a loan that you pay back and occasionally without interest.  Today though many companies are taking away store credit because they can’t afford to extend these unsecure loans.

There are a variety of costs and charges that go with the three options.  As mentioned above the store cards are going to have significant costs compared to most credit cards.  Store cards offer higher interest rates as they are non competitive.  A consumer can quickly get into a trap in which they are unable to pay the cards off in a decent amount of time.

A consumer using these options also needs to weigh the outcome.  The loan might be cheaper, but that doesn’t mean it is a good thing.  The credit card, while fairly expensive on the interest rate, offers you a change when needed.  A consumer can switch the balance to a different card for an introductory deal down the road.  Most store cards will not allow for balance transfer options to other credit cards.

The other tip to keep in mind before making a choice is getting a card you can afford.  In other words don’t get a line of credit if you can’t afford to pay it back.  Most consumers have at least 2,000 pounds of debt on their cards because they can’t afford to pay it off.

When a consumer does get a card it is important to comparison shop and make sure the annual percentage rate is decent.  Many store cards have very high interest rates which make them less appealing, but they have great store rewards. Don’t be fooled.