Money spent on the card is repaid in full or in part at the end of the month. If you don't repay in full, you will incur an interest charge.

Although borrowing on credit cards is becoming cheaper, it is still only a good idea to spend up to your credit limit if you have the resources and self-control to pay off the full balance at the end of each month.

Keeping within your limits

The key thing to remember with a credit card limit is that this is a ceiling, not a target!

Although many people don't feel comfortable with a credit card, either because they're worried about running into debt or because they are concerned about losing control of their finances one way or another, credit cards are an increasingly common method of payment.

Many companies prefer to deal with credit cards because there is no need to handle cash and all its attendant risks. If you buy a good or service over the internet, you may find that only certain types of credit card are acceptable for payment.

Bank account or cheque guarantee cards are often not valid for online purchases.

Cheap deals

While cards are easy to use, it can be tempting to spend more than you can afford. The less you pay off, the more interest you will be charged - and it is levied at a much higher rate than bank loans so it should not be used as a way of borrowing money on a long-term basis.

Different issuers offer different charges and interest rates and low introductory offers are becoming more common so it is important to shop around to find the best deal. The right one will depend on your individual circumstances.

If you want to be able to spread payments through the month or need to arrange a short-term small value loan, credit cards are still one of the best options available to consumers.

But if you are looking to borrow over £10,000 for any length of time, check out the loans available from building societies, banks or specialist lenders first, as they should be able to beat the high annual percentage rates (APRs) charged by many credit card companies.