Things to watch out for
The late payment trap
Your statement will show that you must make a payment by a certain date each month. If you miss it, you may be fined a late payment charge. If you're behind with your payments, this could also show up on your credit history, which another potential lender might also see.
An easy remedy: ask for a direct debit form from your card issuer. You can then choose to pay off the full balance every month, or the minimum payment, automatically from your bank account.
The minimum payment trap
It's easy to slip into a pattern of paying just the minimum payment each month. But it means, of course, that interest is building up, month after month, on every pound you owe. If you can't pay the balance off, at least try to pay a bigger amount each month.
The cash trap
Don't confuse credit cards with debit cards when you're at a cash machine. If you use a credit card to withdraw cash, you'll normally be charged an extra fee every time. Some credit card companies also offer credit card cheques but bear in mind that they charge interest from the moment they're used.
The store card trap
Many leading shops and stores have their own credit cards. They offer benefits such as extra discounts for cardholders only, and preview days for sale goods ahead of the general public.
However, many store cards carry very high interest rates if you don't pay them off immediately - in some cases, double the cost of ordinary credit cards. Be careful to check their APR rate before taking out another card.
Other ways to borrow
Credit cards have their advantages, but they're not always the right choice. If you can't pay for what you're buying and need the help of some extra funds, consider a bank overdraft or a personal loan - see Loans for more information.
Top tips
- Set up a direct debit to make sure your minimum payment is made each month.
- Ask yourself whether credit cards are the best solution - a loan might be cheaper.
- Don't use credit cards for cash unless you have to.
- Don't sign up for a store card without checking its interest rate (the APR).