BORROWING ZONE - Credit cards

Read the UK credit card guide to learn all about UK credit cards.

UK credit cards are a flexable form of loan agreement between the lender and the customer who may only need credit intermittently during the loan term. They offer credit up to a pre set value, ie the credit card limit, to customers as and when they needs it.

The Credit Card is issued by many companies such as Visa, Mastercard and American Express. The service is often supplied via banks, eg Natwest or other merchants such as General Motors (GM), that are seperate companies to the credit card company.

Credit cards are known as 'plastic' because access to the service is facilitated on a coded/electronic plastic bank card which the bank provides to customers, which they use to obtain their loan.

The card may be used to purchase merchandise directly with traders who have facilities to accept payments from plastic. Alternatively, the card may be used to withdraw cash from automated cash machines, provided by many banks - known as cash advances. The customer may use all of the loan in one transaction. Alternatively, they may only use some or all of the loan over a number of transactions.

The lender will issue statemants to the customer monthly, and may levy charges and interest depending on how much is borrowed, how it is borrowed, and the period over which it is borrowed. The amount charged relates closely to these three factors, and vairies considerably. Before discussing charges and interest, lets look at how an individula obtains a credit card. This area is looked at in more detail later in this report.

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