Purchase now and pay later

Credit card carrying bags

Credit Overview


Credit Cards

Purchases are invoiced via a monthly statement.

You can borrow up to an agreed credit limit.  Once you reach the limit, you have to pay off some of the outstanding balance before you can spend any more on the card.

Flexible repayments – you must pay at least the minimum amount;  you incur interest on the balance.

You might pay different interest rates depending on how you use your card e.g. for purchases, balance transfers or cash withdrawals.

Store Cards

Store cards are similar to credit cards, for use within specific retail groups.

🙁   Less flexible and generally more expensive than credit cards, due to higher interest rates (APR).

Manage your Credit

Using a credit card in the right way helps to build your credit history.
But to keep costs down, you need to shop around and switch, use your card sparingly, pay punctually and always try to clear your monthly balance.

Graduate credit cards

Some providers offer credit cards specifically for students, graduates or young professionals – designed to prevent you getting into too much debt e.g. Barclaycard Graduate Credit Card

Initial interest free period
But even Graduate/Student credit cards charge high interest rates once any interest free offer period has finished;  lenders view their young customers as high risk, owing to the lack of security from a regular income.
Check the APR, which takes account of the higher rate once a bonus deal ends, and will give a better picture of the annual interest rate.

Credit limit is capped at a relatively low amount (e.g. £4000), so you can’t rack up bills that you are unable to pay back. But if you exceed your credit limit you will face hefty charges, so be careful.


Shop around

Compare the deals on offer.  Check out:

Costs: APR and charges

Credit limits

Cash Back or Rewards schemes – some credit cards give cash back on certain purchases, while others offer rewards on spending via vouchers or Avios points etc.

Take advantage of introductory offers such as an initial interest free period.  But be aware that APR and charges will be high once the offer ends.



You can transfer your balance to a new card.  So you might be able to benefit from an opening offer of 6 months interest free credit, then move again.  But do check if there’s a penalty for switching.

Use sparingly

Don’t be tempted to spend money you haven’t got.
Try to limit use for unexpected expenses, not as a general tool for borrowing.

Avoid using your credit card to withdraw cash from ATMs

It’s very expensive! 🙁

There is a withdrawal fee (about 3%).

The interest rate is higher for withdrawals than for purchases.

Interest is charged from the moment you withdraw cash.

Keep up with repayments

You must make at least the minimum payment to protect your credit rating and avoid hefty charges.

High interest rates mean the cost of credit accelerates quickly, so always pay off as much as you can afford, preferably clear your monthly balance.
Use Direct Debits to ensure automatic punctual payments.

How to Set up Direct Debits & Standing Orders – Money Advice Service


Protection for purchases

Credit card providers must ensure that products arrive safely, in the condition that they were described. So if a supplier fails to deal with a problem, you can claim a refund via your credit card instead.

Find out more:

Credit Cards – Virgin Money
3 minute film

What Type of Credit Card? – Compare The Market
Includes credit-building cards for people new to credit

Credit – Money Advice Service

Top Credit Card Mistakes – This is Money


Always get independent, professional advice for your particular situation.


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