The basics

Credit cards are one of the easiest ways to borrow money for a short period of time. They can be used in Britain or overseas to buy goods and services and to get cash advances.

Interest rates vary from card to card and according to how credit is obtained - for example, a card issuer may charge different rates for cash advances and purchases. Rates can range from below 10% to as much as 29% APR. As well as charging different rates, providers calculate interest from different times so it can be difficult to compare costs fairly.

Most providers offer an interest-free period on purchases - usually up to 56 days - while cash advances tend to attract interest straight away. A number of providers run introductory offers, giving interest-free periods of perhaps up to 12 months for purchases or balance transfers, though the latter now generally incur a 2% handling charge.

Many cards have some form of insurance built into them, covering damage to goods purchased with the cards or cancellation of a flight or holiday. This is free and can be useful if you have a problem with an item bought on your card, but there are usually conditions attached so read the small print if you intend to rely on the cover.

Payment protection insurance - which will cost you a percentage of your outstanding balance each month - should be optional and you should look at what it covers before signing up.

The card issuer will put a limit on your spending and it will stipulate that each month you repay a minimum of £5 or 5% of the outstanding balance on your card, whichever is the greater. You should pay more than this if you can as outstanding balances will attract interest.

Affinity cards are simply credit cards with an organisation's logo on them. Usually the organisation will receive a donation each time you make a purchase with the card.