Disclaimer: Our website and publications aim to give you general information to help you make financial decisions. It is not advice, nor can it take account of your own particular circumstances. For advice with a view to making decisions about your own circumstances you should consult a financial or other professional adviser.

© The Financial Services Authority.

Using your credit card

Your credit limit

Your card issuer gives you a limit that you can spend up to on the card. If you go over that limit, your card will probably be refused when you try to use it again. Even if it's not, you may still have to pay an extra charge to your issuer.

However, once you've shown you use your card responsibly, your issuer may offer - or you can ask for - a higher limit.

On the other hand, you may feel your limit is actually too high and, if you spent at that level, the payments would be too stretching. If so, you can always ask for the limit to be reduced.

Chip and PIN

Like bank cards, credit cards come with a PIN (Personal Identification Number) that you must enter every time you buy something. So it's vital that you remember it. If you don't like the number that comes with your card, you can change it - just insert the card into an ATM (cash machine) at most banks, and you can change it to something unique to you. Obviously, never reveal your PIN to anyone, or write it down where someone might find it.

Your monthly bill

Every month, you get a bill which sets out what you've spent. You have to pay the minimum payment it shows, which will be a small percentage of the amount you owe. However, any amount left unsettled starts to build up interest.

Alternatively, you can pay the bill off completely and, if you do, there's no interest to pay.

Protecting your payments

Some lenders suggest you buy payment protection insurance (PPI) from them when you start a credit card or loan. PPI helps you keep up your payments on a loan or credit card if you can't work because of illness or redundancy. This means the insurance company will pay the monthly repayments (or a percentage of them) on your behalf for a fixed period – usually 12 or 24 months. See Payment Protection Insurance

You can compare the features and costs of PPI products using our impartial comparison tables at Compare PPI.

Top tips

  1. Try to pay your credit card off every month. Interest mounts up rapidly.
  2. Think about what would happen if you lost your income and couldn't keep up repayments on your credit card.
  3. Don't rush into insurance if your loan is fairly low. It's not compulsory and you might be able to manage the payments anyway.
  4. Don't fail to make at least the minimum payment. You'll face extra charges otherwise.