Choosing a credit card provider
Advice
Using a card to build up your credit history
If you are looking to build up your credit history then you may need to consider those that advertise for customers looking to do so, they usually come with a very low level of credit, such as £200 or so, however, we would suggest that when you receive the card you do three things.
- Set it up so that the full payment is taken by direct debit every month;
- Allocate a required spend to the card, such as TV license, car or house insurance; then
- Most importantly, avoid temptation, put it in a safe place at home (don’t keep in on you) and make sure it is only used for something that you truly need. This then means you get the protection under section 75 of the Consumer Credit Act 1974 protects you when you spend between £100 and £30,000 with a credit card on a single transaction.
Anyone seeking to change cards should think carefully about what they are looking to achieve, for instance, switching balances to a zero-rate card sounds great (remember to check their fees though) or potentially looking to build up rewards or even cashback sounds great but may well depend on the actual card spend, spending money on unnecessary things just to get a fraction of the money back as a reward makes little sense – in addition such cards may carry an annual fee.
The Truth in Lending Act (TILA)
This is the first section of the Consumer Credit Protection Act and requires that several details about the credit arrangement be disclosed such as the loan amount, APR payment schedule, other fees and ultimately requires that many of these details be presented in a standardized format for easy comparison. Many offers require extra clarification under TILA. For example, if a card has an interest-free period then this must be clearly described as an “introduction” period and the issuer must explain when and how this period will end. The Act also requires that credit card statements note how long it would take to pay off the balance if you were to only pay the minimum payment.
Lestons are not financially qualified to advise on credit cards but common sense infers that credit cards can be a blessing in certain situations, but the lenders business relies on the interest payments and will tempt you with increased limits/loans to charge you interest. The most obvious concern is when the balance reaches a level where the payment just covers interest and not the actual debt, hence a vicious circle. In desperation to buy essentials many people take out a second card, then this card gets maxed out, so a third card arrives etc. A spiral of debt can occur very quickly.
General caution
Spending more than we can truly afford creates a myriad of problems, especially stress, accepting that you have a problem in meeting payments is the first step, when you realize that you are in this situation don`t ignore it as it will only get worse, your card provider does not know there is a problem unless you tell them, they may well help you in ways that are more helpful than you envisaged, many will freeze your interest and allow you to pay a token payment until things improve – this “breathing space” can make a huge mental difference.
How we can help
Lestons are not registered financial advisors, however if you are in need of help choosing a card provider, we do work with several excellent third-party specialists who can help with any financial matters, we make no commission from these referrals but do need clients to open a case so that we can prepare a financial brief for them. To gain our assistance you need to open a case, this is done by simply clicking on the link at the top of the page, you will then need to deposit a sum equal to one hour’s usage, upon receipt of these funds you will be assigned your personal caseworker who will telephone you to discuss the matter and make suggestions on how to proceed.
Please note your caseworker can only give generic advice, their role is to prepare your details for handling by our appointed financial advisor and to act as your point of contact, they will also issue you with your Password and PIN, these will be needed to log onto your client dashboard. From your dashboard you will be able to manage and view every aspect of your case, upload documents, images, files etc.