How do credit cards work?

Although there are over 500 branded credit cards in the UK, they are all operated by three international networks: Mastercard, Visa and American Express.

Before deciding whether to grant you a credit card, providers will assess your credit rating using files kept on you by credit reference agencies such as Equifax and Experian. Points in your favour will include good debt management, such as repaying a mortgage on time, and a long relationship with the same bank.

Points against your application include having no credit history, moving your home address frequently over a short space of time and country court judgments.

Cards start charging interest on purchases at different times. Some charge from the date the purchase is made, others on the date it is debited from your card account, and a few from the date on the statement. The third method will incur the least amount of interest.

If you repay your account in full, most cards will offer an interest-free period the next month. This can be up to 59 days. On joint credit-card accounts, the first-named card holder is liable for debts run up by any additional card holder. However, the second-named person is not legally liable for the first person's debts.

Watch out if a card has an exceptionally low rate of interest. Some of the cheapest cards have a late payment penalty of as much £20 if your monthly payment is even a day late or if you exceed your credit limit. Check whether a card's special introductory rate applies to new purchases or only debt transferred from rival cards - and whether the normal standard rate is competitive.

Under the 1975 Consumer Credit Act, the bank issuing your credit card is held jointly liable with the supplier if goods bought on your card are shoddy, lost or not what you ordered - this applies to purchases between £100 and £30,000.

Goods bought on debit cards, which deduct the money directly from your bank account, or charge cards, which must be paid off in full each month, are not covered under the Consumer Credit Act.

Many credit cards claim to offer security against internet fraud - but few point out that you are already only liable for up to £50 if your card is used fraudulently, unless you have been grossly negligent.

Some service providers, notably theatres, taxi firms and ticket-booking agencies, levy a surcharge or handling fee for paying by credit card. This can be any level they wish - but you must be informed of it before you sign for payment.

Gold credit cards target high-spend customers. To qualify, a credit card must offer a minimum credit limit of US$ 5,000 (£3,000) and provide an emergency medical hotline. There are no specific requirements for platinum cards. Some credit cards - known as affinity cards - make a donation to a particular charity or organisation every time you spend - typically 0.25 per cent of each purchase.

Credit cards come with a variety of insurances. For £8 to £10 a year, card protection will cancel all your credit cards if they are lost or stolen, and wire cash in an emergency. Payment protection involves a small monthly premium and will meet your minimum monthly payment for 12 months if you cannot work through sickness or accident.

Withdrawing money from cash machines using your credit cards is expensive. Most cards charge a handling fee of 1.5 per cent on each withdrawal and may not give you an credit-free period before interest starts to be charged.

Using your card abroad can be cheaper than buying foreign currency or traveller's cheques. Although there may be a foreign usage charge on each purchase, currency exchange will be at a wholesale rather than a retail rate.

Guard your credit rating

By TED GRIFFITH

Since the end of September, under a new state law, Delawareans have had the right to sign up for a credit- report "freeze," a protection against identity theft.

But, having the right to sign up is different from getting it all done.

George Fitzgerald, a volunteer lobbyist with the Delaware Credit Union League, which pushed for passage of the Delaware credit-report freeze, said the process of establishing the protection is cumbersome.

Fitzgerald, of Greenville, said he couldn't estimate the number of Delaware residents who have frozen their credit reports since the law went into effect Sept. 29, but added that it's probably just a few people because of the bureaucratic hurdles consumers have to clear before they can sign up. Still, Fitzgerald said, if you're "patient and detailed," you'll be able to get the protection.

"It is do-able," said Fitzgerald, who recently sent off his applications for the freeze.

Before signing up, it's important to understand what the measure does. By setting up a credit-report freeze, you will prohibit the major credit bureaus -- Equifax, Experian and TransUnion -- from releasing your credit information to lenders unless you supply a personal code.

Your credit report reflects your track record for paying bills and the amount of your outstanding debt. Lenders typically will not make loans or extend any form of credit unless they first have an opportunity to review your credit report, which is seen as a crucial indicator of your creditworthiness.

That's where the credit-report freeze comes in. Even if a fraudster has your Social Security number and date of birth, he or she wouldn't be able to take out a loan or open a store charge account in your name because the lender wouldn't be able to review the frozen credit-report information, Fitzgerald said.

"I call it a vaccination against fraud," Fitzgerald said.

Still, consumers who exercise their right to implement the freeze will have to contend with inconvenience. Once you've signed up, you will have a waiting period of three business days to unlock the information. That could impede such practices as signing up for a retail-store charge card, arranging for electric service to a home or getting insurance.

Lenders aren't the only ones who rely on credit reports -- utilities, insurance companies and even prospective employers -- also like to review them. Delaware law mandates that the three-day lag to thaw credit-report information shrinks to just 15 minutes by Jan. 31, 2009. But, for now, the credit bureaus have three business days to release your information when you need it.

It also involves an expense. A credit bureau will charge $20 per person to set up the freeze. For a couple, that would be a total of $120 for all three credit bureaus. However, consumers who have been victims of identity theft can sign up for the freeze at no cost, although they'll have to provide a police report to demonstrate they're eligible for the fee waiver, Fitzgerald said.

Once you've established the freeze, there is no cost to unlock your credit information temporarily so you can, say, apply for a loan.

Even if consumers do put a freeze on their credit information, they shouldn't set aside worries about identity theft, said Donald W. Nicholson Sr., a financial planner in Brandywine Hundred. Nicholson said no protection is perfect and recommends that his clients regularly check their credit reports so they can catch fraud or errors early. Mandated by federal law, consumers can get free credit reports once a year from the three major credit bureaus by visiting www.annualcredit report.com or calling (877) 322-8228.

Fitzgerald also recommends a regular credit-report review. He said it's smart to have your report in hand when you set up the freeze because the reports provide phone numbers so that you can call the bureaus with questions or complaints.

Islamic State of Iraq Takes Credit for Two Suicide Operations in and around Baghdad

The Islamic State of Iraq took credit for two suicide bombing attacks in the Baghdad region on November 12, 2006. The first attack targeted groups of Shi’a standing in line at a police recruitment center in Baghdad, killing at least 35, according to media reports. The second attack, perpetrated by a member of the Mujahideen Shura council, was against an American convoy in the al-Taji region, north of Baghdad.