Using a Credit Card

Some retailers will refuse a personal cheque, but will accept a credit card, particularly a Visa Card, which is most widely accepted credit card in the world, although MasterCard is not far behind.

A credit card is extremely useful for shopping online, as you can pay for your goods or services from the comfort of your own home, and then have goods delivered to you. Some companies, such as airlines, may offer discounts for buying online with your credit card. You need be careful though, as fraud over the internet is a real threat. Only use sites that are secure, as shown by a locked padlock icon in the bottom right-hand corner of their payment page. You also take a risk if you buy from overseas, because you may have no legal recourse if they fail to deliver the goods or they are defective in some way. But most companies are honest and reliable.

When you apply for credit, the credit provider will always check your credit history. It does this by contacting Credit Reference Limited, which is the main credit reporting agency in Australia. If you have already used credit, Credit Reference will have a file on your credit history. It will contain personal details such as your name, age, address and driver’s licence number. The file will also list your credit and default history. Only credit providers who subscribe to Credit Reference, consumers seeking their own files and some government agencies, can access consumer files. All inquiries are noted on the file, including who had access, what information they obtained and the date of access.
A credit provider must first obtain your permission before looking at your credit file. However they are unlikely to process your credit application if you refuse permission.

Some people use store credit cards, but this can be a very expensive option, as the interest rates are generally substantially higher than ordinary credit cards. It may be worth it if you shop at the store on a regular basis, or if you wish to take advantage of discounts and loyalty programs. If you choose this method, it may be better to purchase some high cost goods, such as refrigerators or computers, pay off the card, and then cancel it.

The type of credit card that is best for you mainly depends on your spending patterns. If you never pay your account in full each month, you may be better with a credit card with a low interest rate and no interest-free period. If you use your credit card for convenience and usually pay the account in full each month, you should probably choose a card with the longest interest-free period. These cards usually charge an annual fee, have a higher interest rate, and offer loyalty programs such as frequent flyer points, and points for making purchases on your card.

For more information on credit cards go to http://www.creditworld.com.au/credit-card-offer.html.

Summary

• Credit cards are convenient for both shopping at stores and online.
• When you apply for credit, the credit provider will, with your permission, check a file on your credit history held at Credit Reference Limited. If you refuse permission your credit application will probably not be processed.
• The best type of credit card for you depends largely on your spending patterns, whether you usually pay your credit card in full each month, or not.

Article correct at its author date: Jan 2007. Copyright Virtual Office Space, Any unauthorised reproduction of this article will be prosecuted to the full extent of the law. Credit Cards Australia.

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