Credit is the guarantee to repay money borrowed
from another, with interest.
A credit card enables you to make purchases at most
stores. Credit cards can now be used at almost any retail
outlet such as services stations, department stores or
restaurants and may be used to purchase goods or
services such as medical bills, weekly groceries, electricity
bills, clothing and holidays. People use credit to buy
products such as cheap airfares on the Internet. A credit
card also allows you to withdraw cash (cash advance)
from an automatic teller machine (ATM).
A credit card is approved with a given credit limit e.g.
$4,000. When you spend money the amount of credit
Some credit cards charge an annual fee. This may vary
from as low as $25 and may be as high as $90. This fee is
payable whether or not you use the card.
Over limit and late payment fees
Most credit card providers charge a fee if you make the
monthly payment after the due date or if you exceed the
limit on the card. The minimum monthly payment is
usually due within 20 days of receiving the statement. The
fee will vary but is normally around $25.
Interest is payable on the amount of debt outstanding at
the end of each day. In other words, interest is charged at
a daily rate. The rate of interest on a credit card varies
and is subject to change. The interest rate is often higher
where the card has more facilities or 'benefits'. A ‘basic’
card will often have a lower rate than a card which offers
extras such as free travel insurance or loyalty rewards,
like points towards free air travel or interest free periods.
If your card has interest free periods and reward points,
the interest rate may be higher. You should shop around
for the card that best suits your requirements.
Cannex has information that helps you to compare the
costs of credit cards. You should visit their site at
Interest free periods
A number of card