What do I need to know about using a credit card?

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If you have a credit card, there are some things worth considering to ensure you’re getting the best deal.

  1. Check your interest rate

    Make sure you are not paying a higher interest rate than you need to. If you have had the same credit card for a number of years, there is a good chance you could get a credit card with a cheaper Annual Percentage Rate (APR). The APR is the total cost of borrowing for a year, made up of a combination of interest and fees.

    In 2022 new rules were introduced meaning that APRs on new credit cards cannot be higher than 23%. If you are paying more than this, contact your provider and ask to be moved onto a better rate or switch to another provider.  

  2. Not all credit cards are the same

    While credit cards are broadly similar products they all come with different terms and conditions. They have different charges for services and they could have different ways of calculating your interest rate and fees.

     For example, some credit card providers might charge you interest on the full balance on your statement, even if you have made a partial payment against it by the due date. Talk to your provider if you have questions on how your interest is being calculated.

    If you can, try to clear your balance, or pay as much as you can, every month.

    Example

    Mary made a transaction of €500 on her credit card in January. She made a payment of €100 on the payment due date in January, and carried over the balance of €400 into February.

    Under the terms of her credit card, as she didn’t make the full repayment by the payment due date, she loses the interest free period on the entire balance. As such, Mary was charged interest on the full €500 from the date of the transaction until the payment due date.

    Mary will continue to pay interest on the remaining balance of €400 until she has cleared it in full. 

  3. Credit cards are not for life – you can switch at any time.

    You can switch your credit card provider at any stage. There are many providers of credit cards in Ireland and they offer a range of rates and services.

    Take a look at other providers charging cheaper interest rates and with similar or better conditions than your current card. 

  4. Don’t be rushed into a decision

    If you get a new credit card, don’t be pushed into making a quick decision. Take the time to look at the interest rate and understand the terms and conditions to make sure you’re getting the best deal.  

  5. Credit cards are expensive loans

Remember, buying things with a credit card is a type of loan. If you miss a minimum payment this could be reported to the Central Credit Register and will appear on your credit report. 

It can be an expensive form of credit. A credit card may not be the right solution for your needs. In some cases it may be a better option to use other types of lending such as a personal loan to pay for goods or services. 

The Competition and Consumer Protection Commission has information on credit cards, including dealing with debt and disputed transactions. 

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