Small Print
Whenever you apply for a new credit card, there are items in the small print that you should always be aware of.
Naturally, card issuers will spend far more effort telling you about their 'low' interest rates than they will about when higher rates start to apply, or how much you will be charged for using your card abroad.
Key credit card charges to look out for
Foreign loading - up to 2.75% every time you use your card abroad - including internet purchases in currencies other than sterling. Nearly all lenders charge this fee.
Cash advance or withdrawal fee. If you use your credit card to withdraw cash, you will usually be charged a handling fee - whether you use an ATM or go inside the bank branch. If you withdraw cash outside the UK, you will be charged this cash advance fee in addition to the foreign loading charge.
Foreign loading and cash advance fees usually apply on debit cards as well as credit cards, unless you are using your card in a UK-based cash machine, or in a branch of your own bank.
Balance transfers are always paid off first. Therefore, if you have a 0% APR offer, and you have £1,000 transferred, and £1,000 spent on the card, if you repay £1,000, that will clear the balance transfer, not the new purchases.
Late payment fees - you will usually be charged a fee for missing a payment. Credit card issuers also often will share this information with credit reference agencies, which could mean you pay even more in the long run by making it harder to get the best credit deals.
Over limit fees - be careful to avoid going over the limit on your credit card, as this will also attract charges, and affect your credit score.
Payment protection insurance - this is usually sold as a small percentage - say 79p for every £100 owed - but in reality, this is a very substantial additional amount. If you keep a balance of £1,000 on your card, you will pay £7.90 this month, then £7.90 each and every month you have the outstanding balance.
This works out as a staggering £94.80 per £1,000 balance per year - or the equivalent of paying an extra 9.48% APR! These policies are also notorious for not paying out. Your best bet would be to arrange income protection, or other critical illness cover independently.
