Credit Cards
A credit card is simply a form of borrowing. The issuer of the card, a bank, sets a maximum credit limit and the card holder can spend as much as they wish up to that limit – provided they make repayments of a minimum amount every month.
The credit card may simply serve as a form of revolving credit, or it may become more complicated with separate credit limits applying to the various balance segments.
As the rates and terms vary, savings are available by switching cards, which can be considerable if there is a large outstanding balance.
Some card holders reduce their interest repayments by switching to a lender offering zero per cent rates on balance transfers for a limited introductory period. This can be an effective way of avoiding charges, always provided that the debt is cleared before the interest rate is levied.
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