In addition to the obvious credit products, there are also other forms of credit. Here are a few of the common types.
Overdrafts
Some banks allow you to withdraw more money than you have in your account on occasions. However, it may be only up to a limit agreed beforehand. You have to pay interest on this overdraft. If you exceed the set limit and wish to withdraw more money from your account, your bank will refuse or will only allow you to do so against the payment of a higher charge. It is best to contact your bank as soon as you think that you are approaching this point.
Store cards
These are cards that major retailers offer their customers as a means of payment, such as MyOne from Manor and Partners or the Globus PlusCard. The cards are tied to an incentive scheme. Customers are awarded points every time they shop. They collect the points, which they can redeem against gifts.
A store card
- typically offers a lower credit limit than a credit card and
- can only be used in the shops which issue it.
Store cards work just like a credit card. The store sends all its customers a statement every month. You should ideally pay off the full balance at once. If you cannot pay at once, then you may be able to pay off the balance in instalments.
As with other credit products, before deciding on a store card, you should weigh the costs and benefits. In any case, make sure to find out all the details of the payment arrangements.
Hire-purchase
In this case, you get the goods such as a television or a PC now and agree to pay the purchase price later in installments, including a surcharge (interest plus costs).
