With debt at an all time high, many of us will be looking to
either transfer our current credit card debt or apply for a new
credit card with more benefits or lower interest rate. However,
with a plethora of card offers out there, deciding which card,
if any, is best for you can seem a little daunting
What follows are some useful tips and advice that hopefully will
help your decision making a little easier and clearer.
Loyalty/bonus cards
As people's circumstances vary so do the credit card deals on
offer. If you intend to clear your bill each month, the interest
rate on your card becomes irrelevant as you won't have to pay
it. Therefore you should consider going for a card that offers
some form of loyalty bonus such as redeemable points, cash back
or air miles.
Interest-free offers
These cards are particularly useful for those don't clear their
balance each month. Shop around for cards that offer 0% interest
on balance transfers and purchases. The length of these offers
tend to vary, so choose one that is appropriate to you needs
i.e. whether you intend to use the card mainly for purchases or
a balance transfer.
Some cards allow you up to 59 days to pay for purchases before
being charged interest on them, thus giving you some breathing
space to pay for your goods or/and services.
Special offers
One way to save money on your card debt is to take advantage of
the many debt-transfer offers available from most banks. These
offers are usually exclusive to new customers and allow you to
pay off your debt from a more expensive card at a lower rate for
a limited period.
Cash
Although you can withdraw cash from ATM's with your credit card,
it is best left as a last resort as, although convenient, you
will pay for the privilege through a steep interest rate.
Plus points
Using the plastic to pay for expensive items such as jewellery,
electrical goods or goods bought online, gives you the piece of
mind of consumer protection i.e. under the Consumer Credit Act,
the card company are liable (as is the seller of said goods or
services) if there is a breach of contract.
This is especially handy if the goods either arrive
faulty/damaged or don't arrive at all due to the supplier, for
example, going bust. If any of these scenarios were to arise,
you should have the money spent redeemed to your credit card.
Charges
Most cards will levy a charge against you if you fail to pay
your monthly repayment on time, with penalties usually around
£20. You will also incur a charge if you go over your set credit
limit. Setting up a direct debit to make your monthly payment
will eliminate the possibility of being late with your monthly
payment and thus avoid that nasty charge.
What card then?
Deciding what credit card to apply for really depends on your
personal circumstances and requirements.
If, for example, you intend to do some serious short-term
shopping, a card that offers, say six month interest free on
purchases, would be more suitable.
If you know in advance you will be unable to clear the balance
in the short term, then a card that offers a low rate for the
lifetime of the balance, would be suitable as you will save a
great deal in interest payments compared with a card that
resorts to a higher rate after any offers expire.
If you are able to clear your balance each month, then going for
a card that offers rewards, such as cash back on purchases,
would be most prudent.
About the author:
Joseph Kenny is the webmaster of the UK credit card comparison
site
http://www.creditcards121.co
m/, where you can find a selection of
credit card articles. He also writes for the
comparison site
www.cardguide.co.uk which offers some
bes
