Latest Credit Articles

First Atlantic Commerce provides MITec with authentication-only fraud management tools

Fri, 02 Oct 2009 08:50:39 -0700

First Atlantic Commerce (FAC), a leading, international, multi-currency payment gateway and risk management solutions provider, and Mercadotecnia Ideas y Tecnología (MITec), a leading transactional gateway in Mexico, today announced their collaboration to fight online credit card fraud in Mexico.

FAC offers customized consumer authentication-only risk solutions to merchants, acquiring banks and processors in the Latin American Caribbean Region, in addition to a full suite of other online risk solutions including North American Address Verification (AVS) services, CVV2/CVC2/CID validation and Consumer Credit Card verification services.

In a move to add value to their services and provide their clients with the best available technology, MITec has selected FAC for its world-class online risk management solutions.

FAC is providing MITec with AVS-only services, which allows merchants to automatically screen by comparing the online billing address to the billing address attached to the cardholder's credit card, and process transactions in real-time.

MITec is also using FAC's 3-D Secure only service, which is a fully compliant payer authentication solution for Verified by Visa and MasterCard SecureCode designed to protect international online merchants from fraudulent transactions.

Gabriel Gomez, director of fraud prevention for MITec said: "FAC's solutions are key in helping us to mitigate chargebacks and credit card fraud. We are now armed with incredible consumer authentication tools from FAC, which we have integrated into our fraud prevention services to help fight online credit card fraud."

Added Christopher Burns, FAC's VP of International Business Development: "We are excited to be a part of MITec's online fraud prevention strategy. Our fraud management solutions are the ultimate in online protection and we look forward to a long and rewarding relationship with MITec."

For more information on FAC's approach to authenticating consumers online, banks and processors should contact info@fac.bm today or visit the company's website – www.firstatlanticcommerce.com.

First Atlantic Commerce (FAC) is a leading Internet, multi-currency payment and fraud risk solutions provider. Headquartered in Bermuda, and established in 1998 to create secure card-based payment solutions for e-businesses, FAC's cGate technology offers service, flexibility and security to adapt to many business and bank acquirer requirements.

FAC provides merchants with multi-currency payment solutions in addition to fraud and data management services including AVS, CVV2/CVC2/CID, 3-D Secure and IP Geolocation in multiple jurisdictions across Europe, Asia and the Latin American Caribbean Region. For more information, please visit www.firstatlanticcommerce.com.

Do You Need Credit Card Processing Services?

Thu, 23 Jul 2009 04:08:40 -0700

Are your customers asking for credit card processing services? If so, you may want to consider adding this service to your company’s Website in order to provide convenient payment methods that will bring back repeat business. Many companies today are moving more toward e-commerce, which means that if you want to avoid getting left behind, you should get ready to join the throng of professionals who are marching into the electronic age of doing business.

Although you may have relied on cash transactions up to now, you might find that is becoming more cumbersome to make correct change, accept checks that could bounce, and track delinquent payments, all while keeping track of each and every transaction. Farming out some of these tasks to hired help can be costly, which is why you may be able to benefit from credit card processing services. If you conduct business onsite at a primary facility, you can plug in a credit card processor and start taking credit payments immediately, which are far less likely to bounce than personal checks.

But you will first have to open a merchant account before establishing credit card processing services. Look for a longstanding bank with a solid reputation, one who currently offers merchant accounts to dependable business owners like you. Then be prepared to provide the required documentation that shows a stable credit history and a reasonable business plan that depends on credit card processing services. Upon approval, which can come within a few days, you will be able to purchase or rent credit card processing equipment and start accepting credit payments from your customers.

Credit card processing services can be established at your company’s Website. You do have a Website, don’t you? If not, that is the second important step into the 21st century that your company needs to take. Hire a Web designer or sketch a few ideas yourself. It need not be fancy or sophisticated, but rather a basic outline of your company’s services or products along with basic operating information. Then you will need to register a domain name for a small fee and then pay monthly “rental” fees to post your site in cyberspace. Hiring a designer or someone to maintain and update your site will cost a little more, although often you can find a high school or college student who can do this type of work at nominal cost. When your site is up and running and your merchant account is approved, you are ready to open the Website doors to current and new customers for business. They can browse at their convenience and pay by credit card without human assistance at each juncture. You can make money and save money at the same time.

If your company is growing, your customers are asking about credit payments, or you want to move forward with your business plan, give some thought to opening a merchant account, setting up an attractive Website, and adding the convenient, customer service option of credit card processing services.

Prepaid Credit Cards

Sat, 21 Feb 2009 17:06:26 -0800

Why not a pre-paid credit card? It’s a well tried and tested concept after all and quite straight forward. We’re all used to prepaid phone cards, prepaid gift tokens and prepaid gas and electricity meters. The prepaid credit card simply takes the same logic a further step forward, with the added novelty of it being a “credit card without debt”! For those who have struggled to keep spending on their “plastic” within reasonable bounds, prepayment could represent a heaven-sent opportunity to finally knock their domestic budget into shape.

In fact, it’s probably something of a misnomer to call it a prepaid credit card, since no credit is involved and, therefore, there’s never any interest to pay. Whenever you use it (in exactly the same way you would use any of your other plastic), you’ll only be spending money that you’ve already loaded onto your prepaid card. So, there’s never any danger of getting into any debt on a prepaid card.

You load money onto the card in much the same way as any other prepaid facility – namely, by cash, by bank transfer or by using another credit card. Since your prepaid credit card is also a MasterCard or Visa, you can use it anywhere that MasterCard or Visa is accepted, at home or abroad. Using it abroad, of course, would give you a very handy and rather more convenient alternative to carrying travellers’ cheques – with the added reassurance that it’s not going to let you overspend on your holiday money! Furthermore, if the card is lost or stolen, you can simply contact the issuing company, and they’ll send a replacement.

The prepaid card offers the same protection against fraud as regular credit cards. So if you use it to shop online or over the telephone and the card’s been used fraudulently, you can recover the loss. A card also offers greater safety than cash when it comes to carrying it around, so it could be an appropriate alternative for use by children or the more vulnerable (the jury’s probably still out on this one though, and many issuers still limit the use of prepaid cards to those over the age of 18).

As you can imagine, the issuing companies love the idea of a prepaid card, since your use of them is practically risk-free. There’s no need to check your credit status or history, so prepaid credit cards are issued more or less on demand.

So, is there a catch? Not so much a catch, as the relatively high cost at the moment of using a prepaid credit card. Because they’re a relatively novel idea, competition in the market has probably not yet brought the costs as low as they might become. In the meantime, therefore, you should make your choice of card-provider on at least some of the following considerations:

* Will you be charged for simply opening a prepaid credit card account?
* Is there a monthly service charge, and, if so, what exactly do you get for it?
* Is there a charge each time you want to load credit onto the card?
* Will the places that accept your cash to top-up the card also charge for that service?
* Is there a charge for using the card or withdrawing cash on it, including internet purchases?
* Will you be charged for having the card sent to you by express delivery?
* Is there a charge for closing your account?
* Will you be charged for replacing the card, in the event that it is lost or stolen?
* Do you have to pay a fee each time the card is renewed (i.e. upon each expiry date)?

A Guide to the Benefits of Credit Cards

Thu, 19 Feb 2009 02:35:56 -0800

With the ongoing impact of the economic crisis, most people are focusing on how to save money, not spend it. But for some, getting a credit card might actually be the first step towards climbing on the property ladder.

We take a look at the four main benefits of having a credit card.

Convenience

Mike Thomas, who runs money saving website Debtwizard.com, has been advising people for 14 years on how to resolve money matters. He believes that, if used sensibly, credit cards can be a useful tool, especially when it comes to your financial confidence.

He explains, “If you’re going out, you know whatever’s thrown at you, you’ve got a bit of plastic in your back pocket. For some people, just knowing that they’re covered in an emergency gives them confidence.”

In addition, with credit cards accepted in so many places, both home and abroad, you can say goodbye to that cheque book you’ve been carrying around for years, while unlike carrying around cash, if your card is stolen or lost all it takes is one quick phone call and you can cancel the card. Plus, they’re accepted pretty much everywhere and if the cash machine’s broken, it's always there as a back up.

Protection

The economic downturn has seen reports of companies going bust and leaving customers not only without the goods they purchased, but also out of pocket.

However, if you find yourself in this position, thanks to the Consumer Credit Act, section 75, if you’ve paid by credit card, your credit card company will refund the lost money, providing the transaction was for at least £100 (and up to £30,000).

Likewise, if you find a payment’s been made on your credit card without your permission or your card’s been stolen, you should be protected due to credit tokens.

The meaning of credit token is set out in the Consumer Credit Act 1974. The definition is broad and open-ended, but it includes the use of a credit card or debit card on an account which is overdrawn (up to the extent of its agreed limit) or which is taken overdrawn (up to the extent of its agreed credit limit) by the disputed transaction.

If a consumer is using a credit token, even if they’re negligent with their pin, as long as they did not authorise the transaction, they will generally only be liable for the first £50 of any fraudulent transaction.

Likewise, if you’re hoping for some additional consumer security, then many banks will offer extended warranty on items paid for by credit cards. Mike explains, “If you were buying a TV and it came with a one year warranty, as long as you register it within a couple of months and pay for it with a credit card which offers this service, you could end up with a two year warranty instead.”

Credit History

The current climate has also seen a dip in house prices and the number of mortgages offered by lenders.

It’s always important to have as much financial backing as possible and credit cards can be one way to support your claim. Mike Thomas explains, "If you're going to be taking out a mortgage at some time, there’s no harm getting a credit card - provided you pay it back on time. It could help as it demonstrates you have the ability of holding credit and paying it back."

Credit reference agencies record information supplied by the electoral roll, court records and financial data provided by financial organisations. Information included details any defaults or late payments, but also the amount of credit available and the amount that you repay.

Lenders will generally refer to at least one of three credit reference agencies before deciding whether to lend to a particular consumer, so if you’ve used a credit card and have a proven credit track record, this can be more appealing to a mortgage lender than a consumer who’s never taken out credit.

If you're keen to discover what your credit rating is, try a credit rating service.

Additional Perks

With so many credit cards available, it can be tough to work out which one’s best for you and it’s always a good idea to compare a great range of deals.

Some perks to look out for are air miles, zero interest offers on both new purchases and balance transfers and cash back rewards.

Common Credit Mistakes You May Not Realize

Thu, 12 Feb 2009 14:18:48 -0800

Most people think a negative credit score is the result of missed payments on loans or credit cards, but that is only a small part of the equation. In fact, there are a number of lesser known factors that come into play that most borrowers don't realize until it's too late.

See if any of these sound familiar:

1. We've got too many credit cards, let's close some of these accounts.

Mistake - big mistake. 30 percent of your credit score is calculated based on the amount of debt owing against the total credit limit. If you lower the amount of credit by closing accounts, then the ratio of debt to available credit can appear worse than it actually is.

If you have dormant credit cards that require annual fees, then it makes sense to close those, but do so gradually, not all at once. Also select newer accounts over old ones that have built up a credit history. Good customers have longer credit history and closing those old cards is like deleting your financial past.

2. I've got credit cards, but I never use them.

This isn't quite as bad as closing your accounts, but it can have negative consequences. In some cases, a creditor will decide to close the account due to lack of use, and in turn removing any history of use from your credit report.

In a similar scenario, a creditor may not close your account, but may stop reporting it to the credit bureaus, which will have the same affect.

3. It's ok to have a large balance, as long as I pay it off.

Sounds simple, doesn't it? I mean why do they bother giving you that juicy credit limit? Unfortunately, racking up your card sends off alarms with FICO scores. Customers who run high balances, even if paid off every month, negatively effect the whole debt to ratio scenario discussed above. It appears on paper as though you've maxed out your cards instead of keeping them at a manageable limit.

4. So and so is offering a better interest rate, let's apply for their card too.

Keep in mind that your length of credit history accounts for 15 percent of your credit score. If you've had one credit card for ten years, that gives you ten years of history, which is a good thing. However, if you have four cards under two years old, and one at ten years old, all of those time frames would be averaged together, decreasing down your overall score.

In addition, everytime you apply for credit it results in a hard inquiry against your credit report. Many of these inquiries in a short span of time looks suspicious, and may suggest illegal activity. These inquiries don't count against you in cases of auto loans or mortgages where a borrower may be doing some legitimate shopping around for the best rate.

5. What does an overdue library book have to do with my credit?

These days credit can be used to pay for pretty much everything from library dues to dog licenses or municipal water bills. If you pay faithfully every month, no one finds out about it, but the minute a collection agency reports the payment as past due, it shows up as a black mark on your credit report.

6. There is a mistake on my credit report, but it's too much of a hassle to fix it.

It's worth requesting a credit report every now and again to ensure the report is indeed correct and you aren't being penalized for something in error.

7. I can't afford to make a payment this month, but I'll send double next month.

Missed or late payments are the easiest way to trash a credit score. Just as your mother probably told you, make sure you make at least the minimum payment and ensure it arrives before the due date.

Apparently, according to FICO scores, not all overdue or missed payments are treated equally. A past blemish from two years ago where you were 90 days late is not as bad as a recent late payment of only 30 days. The recent indiscretion may be an indicator of a future pattern of lateness. Lenders are not so much concerned with the actual credit score numbers as to the problems they may be pointing to.

If you were to divide credit score indicators up as pieces of a pie, this is how they would look:

Payment History: 35%

Amounts Owed: 30%

Length of Credit History: 15%

New Credit: 10%

Types of Credit Used: 10%

Taking Advantage of Credit Card Offers

Mon, 02 Feb 2009 20:58:58 -0800

The current financial crisis definitely has left a lot of people poorer, but there are still plenty of ways to fund your expenses. One good way is through credit cards.

First of all, it’s very easy to apply for credit cards these days. Some credit card providers do not require a credit card history. Second, having credit cards doesn’t mean useless spending, credit cards now offer cash back on purchases. So owning a credit card can actually be one way of earning money.

There are plently of sites online to compare credit card offers.
If you’re already heavily in debt with your existing credit card, one way to lessen the amount of interest payments is by applying for a new low interest credit card or a O% balance transfer credit card

In fact some of the providers even offer up to 0% interest rates. The sites we mention above both offer a service where you can select and compare low interest credit card providers and sort them by intro APR, intro APR period, regular APR, annual fee and balance transfers.

You’ll be surprised of what you’ll find. For example, do you know that with one card you can get a 0% intro APR on purchases and balance transfers with no annual fee? If you are able to transfer your credit balance to a 0% interest rate with 0% transfer rate, you already have relief from those spiraling credit payments.

When the introductory rate has expired, you can just simply apply for another credit card with the more of the same offer. Just make sure that before you transfer, the interest rate of the new credit card is much lower than the existing one, otherwise you’ll end up having a bigger problem.

There are even some providers that offer no credit card history in their applications for a fast hassle free processing.

If you’re one of the privileged few who are not in need of cash, but want to get the best out of your spending, there are reward credit cards that offer cash backs or reward points that is convertible to cash. Consider this offer:

1. 2% cash back on purchases at gas stations and major grocery stores and 1% cash back on other purchases.

2. No limit on the cash back you can earn, and your cash rewards don’t expire.

3. 0% intro APR on purchases until January 2010.

4. Request for your cash back whenever you want or set up automatic redemption so you won't have to.

5. No annual fee.

You’ll be surprise of how much savings you’ll generate from cash back cards. The savings can amount to something substantial, well off people make purchases with credit cards for this reason.

You can also find credit cards for all types of criteria, including student credit cards and even "bad credit" credit cards. You still need to make up your mind as this article just offer a suggestion and it doesn’t necessarily apply to all.

Building And Maintaining Good Credit

Mon, 02 Feb 2009 20:45:41 -0800

Building and maintaining good credit is important to planning and managing your finances, the better your credit rating and score is the lower your interest rate will be on credit cards, mortgages and auto loans.

In fact, you might not even be approved for a loan if you have a bad credit history or score.Start out by getting a free copy of your credit score to see where you stand, you are entitled to one free credit report per year from Equifax, Experian and TransUnion, you can get your free credit report by going to annualcreditreport.com or by calling 1-877-322-8228.

Now that you have a copy of your report in hand, check to see how accurate it is, you will be surprised how often mistakes show up, verify that each creditor listed is actually a creditor you have an account with or had an account with and dispute anything that isn’t correct, including addresses where you have lived in the past.

Tips to building and maintaining good credit

Open a checking or Savings account, have a financial history will help with getting loans, also give you the ability to pay back the loans

Pay your bills on time.

Keep balances low (if possible)on “revolving credit” (i.e., credit cards).

Pay off debt instead of moving it around when those 0% or low intro offers come in the mail.

Don’t open lines of credit that you don’t need.

Don’t close credit cards that you have had for a long period of time, the length of your credit history plays a factor in the credit score you receive.

Protecting your credit from credit identity theft is another proactive way of maintaining good credit, if you identity is stolen and fraudulent charges are made it will take some time to straighten it all out.

Tips on protecting your credit

Guard your mail from theft by shredding mail before you discard it, especially mail that contains your personal information, including, charge receipts, copies of credit offers and applications, insurance forms, doctor’s statements, discarded bank checks and statements, and expired credit cards.

Be protective of your personal information. Be cautious when giving out your credit card number, address, or other personal information. When possible, only share this information when you know you are dealing with a reputable organization.

Never carry your Social Security card. Leave it in a secure place at home or in a safe deposit box if you have one.

Confirm online purchases are secure, look forthings like a lock and key at the bottom corner of your browser, a URL that begins https://, or the words Secure Sockets Layer (SSL).

Avoid using your card as identification, thieves can use this information to assume your identity and open bank accounts, make purchases, obtain cash, and even get a job or apartment with your identity. Only use your credit card at recognized and reputable merchants.

You can put a “credit freeze” on your account,this will make your credit file unavailable to new creditors which will prevent anyone from opening credit under your name. Your existing creditors and you will have access to your file. If you want to obtain credit you will have to temporarily have the credit freeze lifted.

Tips if you are a victim of identity theft and fraud

If you suspect you are about to be a victim of fraud the first thing to do is put an initial fraud alert on your credit file, this alert will stay in place for 90 days and it will require creditors to verify your identity before issuing credit in your name.

If you have already been a victim of fraud fill out an Identity Complaint Form with the FTC and put an extended fraud alert on your credit file which requires all creditors to actually speak with you before issuing credit. The extended fraud alert stays on your file for 7 years.

You Can Save Money with Your Credit Card

Sat, 31 Jan 2009 02:17:06 -0800

Did you know that you can improve your credit score with the wise use of credit cards? Credit cards can help you build or restore your credit rating. As long as you pay your bills on time and use only a portion of your credit limit you are working hard at improving your credit scores. Using less than 30 percent of your available credit limit is good, but using less than 10 percent of your available credit limit is optimal.

Another piece of information that you need when reassessing your credit is knowing that credit report information is frequently used by employers, insurance companies and landlords. What this means is that you need to be very concerned about your credit standing not just from a credit-worthiness standpoint. Not only is the current credit crunch making getting loans more difficult and certainly more expensive, it can also mean that you may not get that apartment you want, or your automobile insurance will be more costly. A good credit score helps you get what you want, when you want it, at a cost you can afford.

When taking another look at your current credit cards, or cards that you are considering applying for, remember that all credit cards come with directions. When you sign on the dotted line, this means that you agree to the credit card contract that outlines guidelines for consumers or businesses and the credit card company. As a wise consumer, you MUST read the directions and disclaimers and be aware of your rights and responsibilities in the agreement. Not taking the time to read and understand what you are signing will cost you money in the long run.

Everywhere you look these days you will find offers for credit cards that offer rewards ranging from cash back to travel, gas, home improvement and everything in between. If, like many consumers you find yourself wondering if these rewards actually are worth pursuing, this may be a good time to revisit those cards and take a good long look at them.

There are often many benefits to credit cards that are offering rewards. Some offer arbitration services, extended warranties, transaction dispute services, automatic bill paying service, free hotel stay or flight, or discounts for services ranging from theme park tickets to car rentals. Some cards offer a cash back program with 1 or 2 percent or more on your purchases. Something new for consumers is the savings programs with a variety of offers that assist you with putting aside cash for a rainy day. This includes an investment plan or even an offer to pay down on your mortgage, or get discounts on major purchases like cards and trucks. Many come with free identify theft protection.

By taking a good long look at your rewards credit cards you will be able to see where some of these "free" rewards could be used to enhance your current lifestyle. If you are planning a vacation you should consider using a low interest rate credit card that offers rewards, hotel stays or free flights.

But, all this being said, some surveys indicate that more than half of all credit card holders do not use the rewards gained with the use of their cards. The trick here, is if you really don't need those rewards, or anticipate using them, then apply for a low interest card that doesn't offer rewards and keep it paid down or paid off. Being debt free will be the best reward you can earn.

How Can Save Money With Your Credit Card?

Sun, 25 Jan 2009 21:41:01 -0800

Did you know that you can improve your credit score with the wise use of credit cards? Credit cards can help you build or restore your credit rating. As long as you pay your bills on time and use only a portion of your credit limit you are working hard at improving your credit scores. Using less than 30 percent of your available credit limit is good, but using less than 10 percent of your available credit limit is optimal.

Another piece of information that you need when reassessing your credit is knowing that credit report information is frequently used by employers, insurance companies and landlords. What this means is that you need to be very concerned about your credit standing not just from a credit-worthiness standpoint. Not only is the current credit crunch making getting loans more difficult and certainly more expensive, for more details visit to www.positive-idea.com it can also mean that you may not get that apartment you want, or your automobile insurance will be more costly. A good credit score helps you get what you want, when you want it, at a cost you can afford.

When taking another look at your current credit cards, or cards that you are considering applying for, remember that all credit cards come with directions. When you sign on the dotted line, this means that you agree to the credit card contract that outlines guidelines for consumers or businesses and the credit card company. As a wise consumer, you MUST read the directions and disclaimers and be aware of your rights and responsibilities in the agreement. Not taking the time to read and understand what you are signing will cost you money in the long run.

Everywhere you look these days you will find offers for credit cards that offer rewards ranging from cash back to travel, gas, for more details visit to www.make-ezee-money.com home improvement and everything in between. If, like many consumers you find yourself wondering if these rewards actually are worth pursuing, this may be a good time to revisit those cards and take a good long look at them.

There are often many benefits to credit cards that are offering rewards. Some offer arbitration services, extended warranties, transaction dispute services, automatic bill paying service, free hotel stay or flight, or discounts for services ranging from theme park tickets to car rentals. Some cards offer a cash back program with 1 or 2 percent or more on your purchases. Something new for consumers is the savings programs with a variety of offers that assist you with putting aside cash for a rainy day. This includes an investment plan or even an offer to pay down on your mortgage, or get discounts on major purchases like cards and trucks. Many come with free identify theft protection.

By taking a good long look at your rewards credit cards you will be able to see where some of these "free" rewards could be used to enhance your current lifestyle. If you are planning a vacation you should consider using a low interest rate credit card that offers rewards, hotel stays or free flights.

But, all this being said, some surveys indicate that more than half of all credit card holders do not use the rewards gained with the use of their cards. The trick here, is if you really don't need those rewards, or anticipate using them, then apply for a low interest card that doesn't offer rewards and keep it paid down or paid off. Being debt free will be the best reward you can earn.

Credit Card versus Personal Loan

Sat, 24 Jan 2009 20:00:18 -0800

When looking for credit to meet your needs in times when you do not have cash, there are two simple personal credit options. The first is to apply for a
credit card that affords you access to an available credit based on your income and credit worthiness. The other option is a personal loan. Personal loan options allow you to borrow money for a specific amount that is repaid over a set period of time with monthly capital and interest payments.

There are inherent advantages and disadvantages with both personal loans and credit cards. The key is to analyse your needs and shop around to find the product that meets your requirements.

Personal loans

Personal loans are borrowing that is given for a specified amount that has a specific repayment period and monthly payments that include partial repayment of the amount borrowed plus interest.

You can get either secured or unsecured loans. The former are where the loan is secured against something of a great value, such as your home. Therefore, should you default on your monthly repayments, the lender could seize you home in order to get his money back. Unsecured borrowing will cost you more in interest as it is not secured against anything (meaning that the lender is taking a bigger risk by giving you credit), but may give you peace of mind that your home is not at risk of repossession should disaster strike and you can no longer meet the monthly repayments.

With secured lending you can normally borrow a much larger sum of money over a longer period of time, as you will be less of a risk to the lender by providing a form of security. .

Minimum loan amounts for an unsecured personal loan typically range from £1,000 upwards. Maximum amounts for those with good credit are generally around £25,000. Borrowers seeking a loan greater than £25,000 must usually be willing to offer property as security to the lender – ie take out a secured loan - especially when bad credit is involved.

What to look out for when you go shopping

When you go shopping for a personal loan, it is important to examine the lowest interest rates, as well as the features and repayment periods of the loan. Borrowers also need to consider often overlooked factors such as the ability to pay off the loan before the end of the period without penalty. Many lenders will charge you an amount normally equivalent to two months’ interest should you pay your loan off early. This is called an Early Repayment Charge (ERC).

Credit cards function differently than personal loans. Rather than providing a specified loan amount, credit card companies offer you a certain amount of available credit at either a fixed or variable interest rate when used. Applying for and receiving a credit card does not normally cost anything, although some banks do charge application or annual fees. Typically, though, you only pay interest on credit used when purchasing products or services with the card.

Credit cards

Credit cards are more suitable for borrowers that do not have a particular amount in mind when borrowing. Credit cards give spending flexibility to consumers who want to have access to credit when cash flow is not adequate. Personal loans, on the other hand, are more for users who have a goal or purpose in mind, and need to borrow extra cash. Buying a car; carrying out major home improvements; or similar large purchases would likely require a personal loan based on the specified amount.

In the end, it is down to what option you decide is best for you and you need to consider the interest rate payable and the time frame in which you can comfortably afford to repay the debt off.

* Short term borrowing of a fairly small amount (say up to say £5,000) could work out more cost effective if you took out a credit card with a low introductory rate. As long as you paid it off within the introductory period, you could save a lot of money in interest repayments compared to having taken it out as an unsecured loan over a year.
* On the other hand, if you want a larger amount – say £15,000 or more – unless you have the funds and the discipline to repay this back to a credit card company over a short period of time – then a loan may suit you better.