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Guide to credit cards
Useful information on credit cards
What is a credit card?
A credit card is a form of borrowing that lets you buy things up to a pre-arranged limit and pay for them later, either in one go, or by instalments. It's important to work out if a credit card is the best way for you to borrow money. It's also worth remembering that you are credit scored when you apply.
Credit cards can be an expensive way of borrowing. You should try to pay your balance in full every month. If you are unable to do so, make sure you pay the minimum payment. Missing a payment can result in interest and charges and may affect your credit score.
You can use credit cards to withdraw cash from cash machines but you might be charged a higher rate of interest for this service. Cash advances usually attract a handling fee of around 2% of the amount withdrawn.
Interest
Interest rates vary greatly between cards so check carefully before deciding which one is right for you. You may get an introductory interest rate for balance transfers, purchases or even both. Always check what the rate will be at the end of the introductory period as this could rise dramatically.
If you make purchases using your card and don't pay off your balance in full each month, you will have to pay interest unless you have an 'interest-free' introductory offer. If you only pay off the minimum required each month, credit cards can be an expensive form of borrowing.
Balance transfers
You may wish to consolidate your existing credit and store card debt by transferring your balances to another new card with a lower rate of interest, especially if there is an interest-free introductory period on the new card.
This could help reduce your monthly credit card payments and/or clear your debt quicker. There will usually be a fee to transfer a balance and it's very important to know how much this will cost you, before you apply for a new credit card.
Calculate how long you think it will take to clear your debt before committing to another credit card. Some cards may offer balance transfers for a lower fee, but these may come with a shorter interest-free introductory period.
More on transferring a balance to an Ulster Bank credit card
Store cards
Store cards are issued by retailers and operated on their behalf by finance companies. They are similar to credit cards in that you can use them to buy goods and services and you can choose to pay off the whole balance every month or a smaller amount.
Some retailers offer interest-free credit as long as you clear your balance within a certain period of time. Be careful with these deals because if you fail to pay on time you could find interest backdated to the date you made the purchase in the first place.
Store cards generally have a higher interest rate than credit cards but may be useful if they offer discounts for goods purchased at certain times of the year - as long as you pay your balance in full at the end of the month.
Keeping your credit card safe
Ulster Bank credit cards have lots of free safety measures - all designed to protect your card from fraudulent use.
If your card is lost or stolen, you won’t have to pay for any misuse. You just need to notify us at 1800 245 399 or +44 1268 500813 (if calling from abroad) or by accessing our WebChat service. We will order a replacement card straight away. Calls may be recorded.
Keep your PIN* number safe
Never tell anyone your PIN (Personal Identification Number) - and never write it down anywhere. When you receive a new PIN, memorise it straightaway and immediately destroy the slip.
Protection
Purchases made on your credit card are covered by chargeback rights that protect you if you don’t receive your goods or they are defective.
1. Try to avoid using your card to withdraw cash
The interest rate is likely to be higher than if you use it to purchase goods.
2. Check your representative Annual Percentage Rate (APR)
The higher the annual percentage rate, the more interest you will pay on any outstanding balance. Look for credit cards that offer the lowest possible annual percentage rate, remembering to check what penalties are likely to be added for late payments.
3. Don't build up a wallet or purse full of credit cards
Pick one that offers good value and stick with it. It's much easier to budget this way. Know the Annual Percentage Rate (APR) on all of your cards and pay off the most expensive first.
4. Pay more than the minimum payment every month
Otherwise your balance will take a long time to go down. Just because your credit limit is €5,000 doesn't mean that you have to maintain a balance at that level.
5. Set up a Direct Debit
To make regular monthly payments to your credit card. That way you will not be liable for late payment charges. You can still make extra payments whenever you want.
6. Don't miss a monthly payment
Even if you can only afford to pay the minimum payment, this is still much better for your credit score than missing a payment entirely.