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Money tips and MYJAR news

MYJAR Explains: Credit Cards

It’s important to understand all the different options for managing your money. Here we explain how a credit card works, to help you decide whether it might be a good financial choice for you.

What is a Credit Card?

A credit card is issued by a bank or a building society, and it allows the holder to spend money on credit. This means that the money spent on a credit card is not actually sitting in an account. When you spend on a credit card, you are borrowing money and building up debt, which you will need to pay back usually monthly.

How Does it Work?

When you apply for a credit card, you will receive a credit agreement. This will tell how often you need to pay your credit card off, when, and how much. You will usually be required to pay a minimum amount every month, for example £25. However, if you have spent more than this on your credit card and you only pay off the minimum amount, you will have to pay interest on the rest.

The best way to use a credit card is to make sure you are able to pay off the full amount every time your payment is due. Otherwise, it will take you longer and will cost you more to clear your balance.


  • If used sensibly, a credit card can be a very convenient way to spend money, as you can pay for goods and services over time.
  • Some providers offer incentives with their credit cards. These can be loyalty points or even cash-back. Be careful that you don’t overspend just to get the benefits, though.
  • Purchase protection means that if you pay for something that costs between £100 and £30,000 with your credit card, you can claim a refund from your card provider if you don’t receive the goods you’ve paid for or they’re faulty.


  • It can be all too easy to overspend on your credit card and forget that you have to pay it off at the end of the month. It’s essential to keep tabs on your credit card spending, to make sure you don’t blow your budget.
  • There are various fees that credit card providers charge, including for exceeding your credit limit and failing to make the minimum payment by the due date.
  • Missing your credit card payments can have a serious effect on your credit rating. If you continuously fail to pay off your credit card debt, you could find yourself unable to secure credit in the future.

If you want the convenience of a card but don’t like the idea of debt, all current account providers offer debit cards that allow you to spend using the balance on your current account. You can also get prepaid cards that you load up with funds and you know that you cannot overspend.

Need Help?

Another option is to only borrow just the money that you need over the time frame that you need it. A great way to achieve this is through a flexible loan, with a fixed payment date so you're not tempted to drag out repaying your debt. We're an award-winning direct lender, committed to providing clear, simple and responsible loans when our customers need us. If you need some assistance to meet an urgent financial requirement on either a short or long term basis, APPLY NOW for one of our loans.

Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk