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Credit cards

Many UK companies now offer their customers the use of credit cards. Until recently it was mainly banks and financial institutions that offered this facility, but now department stores and even football clubs can become issuers. Many people refer to their credit card as 'plastic' because of its appearance.

Credit cards operate in such a way that an issuer lends money to the consumer who uses the credit card to purchase goods or services. When a purchase has been made, after an agreed period of around 28 days, the issuer will send a statement to the consumer demanding payment. Then the customer will have to decide whether to pay the full outstanding amount, thereby avoiding any interest charges, or make a part payment which must equal the minimum payment indicated on the statement.

Issuers will generally charge a rate of interest on the outstanding balance to anyone who doesn't make the full payment. However it is increasingly common for consumers to shop around and look for the best deal. Many companies offer to transfer balances for customers from their existing issuer to a new account. These prove attractive as they often offer 0% interest on outstanding balances for a fixed period. Many people continually switch between issuers to ensure a continual low rate and to combat that, issuers are creating reward systems where a customer may be entitled to earn cash back against their purchases or build up a number of loyalty points which can be used to buy certain gifts.

The increased use of plastic to pay for goods has led to a change in most people's buying habits. It is now much easier for consumers to finance their purchases and repay their debt to suit their lifestyles. But many people have issued warnings about the record levels of personal debt we are experiencing. Compare this to the first ever company to produce a piece of 'plastic,'The Diners Club in 1950 when it was accepted in 27 restaurants in and around New York ? but of course 'plastic' is now accepted in millions of establishments worldwide.




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