07.23.2008 | 4:48 pm | credit cards
Paying off credit card debt with 0% interest is the perfect scenario, which is why many credit card companies offer such promotions. They know it will attract new customers who have debt with other credit card companies to transfer that debt to their cards. But where is the value to the company offer the credit card balance transfer offer; if they let you repay that debt with 0% interest?
Whenever you see credit card promotions that sound like they’re going to be a good deal for you, it’s best to look into them closely and make sure you read all of the small print. A 0% balance transfer is usually good for a specific length of time – normally six or twelve months. If you have several thousand pounds of debt on a higher interest credit card and take advantage of a 0% balance transfer offer for twelve months, the credit card company is betting on you still having a balance once the promotional period ends. When the six or twelve months of no interest repayments end, the balance will start being repaid with interest.
Remember to check what the interest rate will be after the promotion ends. If you’re moving a balance that you are currently paying 9% interest to a card with an interest rate of 19% after the promotional period ends - unless you are able to pay it off completely during the 0% interest period, you are not likely to benefit financially over the long term. You would have to start looking for another 0% balance transfer offer, or pay the higher interest until the balance is paid off.
Another thing to bear in mind is that most credit card companies charge a transfer fee. This can range from 1% to 5% of the amount transferred. There are some cases where the amount you pay for the balance transfer fee will result in more money paid than if you had just kept your balance on the card it was on and paid interest. To ensure you’re actually getting a good deal, you’ll need to play with the numbers and decide how much you’ll spend for the life of the balance if you keep it on the card it’s currently on.
Interest free balance transfer offers are also only good as long as you make your payments on time. This is something to bear in mind if you have difficulty keeping up with your payments, because if you are late you can lose your 0% interest rate and start paying a much higher interest rate.
In order to make balance transfer fees work for you financially, it’s better to find a low interest balance transfer offer that is fixed for the length of the balance. If you can transfer a few thousand pounds from a credit card with 9% interest or higher, to a card with 1.99% or 3.99% fixed interest on the balance transfer for the life of that balance, you will save hundreds of pounds in interest and actually make out better than the 0% offers (provided you know you can’t pay off the entire balance before the 0% offer ends).
07.15.2008 | 3:00 pm | credit cards
A time when credit card are especially useful is when you’re travelling. If you’re going away on business, credit card make it easy to track your expenditure so you can claim expenses and tax-back. If you’re travelling on a vacation a credit card is often necessary to book hotels and car hire, and you may be able to get a better exchange rate when you change currency.
But you’ve still got to be careful. Here are some tips for a smooth journey with your credit card:
Better Safe than Sorry…
Make sure you have your card cancellation phone numbers written down and stowed somewhere about your person when you are travelling. If the worst case scenario happens and your card is stolen, you’ll be able to sort it out as soon as possible.
Spread the Load
If you’re travelling with your partner or family members, it’s a good idea to have your credit card on different accounts. This is because all cards on an account will be cancelled if one is stolen or lost.
Make Note of Your Card Use
Save all your receipts and keep track of where you used your card. You can check these against your credit card statement when you get home to make sure that no suspicious transactions have been made.
Beware of Extra Fees
Lots of banks charge a conversion fee on transactions made abroad, usually 1% of the purchase amount. Make sure you check with your credit card provider before you travel so you won’t get any nasty surprises when you see your statement.
07.7.2008 | 12:05 pm | credit cards
If you shop in department stores or clothes shops you’re probably familiar with the routine when you get to the till. Would you like to take out a store card? Great discounts on future purposes, and 15% off your transaction today. Sounds tempting. Many store cards come with a raft of incentives – in store offers, money-off bonuses – but are they a good idea?
The brief answer is no.
With Britain in the grip of a credit crunch, households are feeling the pinch and any extra debt is felt more than ever. The main reason for avoiding store cards is the exorbitant interest rates - around 10 to 20% higher than the average credit card. This is okay if you pay off the balance within the interest-free period (usually between 35 and 55 days). As with any credit card, it is the unpaid balance that proves problematic when interest starts to mount.
Taking out store cards may also adversely affect your credit rating, as the more cards you apply for, the worse your rating will be.
Many people fall into store card debt because of the way they are promoted. Shop cashiers with little or no financial experience push frazzled shoppers into signing up, with no explanation of the implications. Teenagers and young adults are especially susceptible to this.
So if you’re going to use credit, it’s best to use a regular card which won’t accrue ridiculous amounts of interest.
07.1.2008 | 3:36 pm | Uncategorized
You may have heard of pre-paid credit card. Also known as secured cards, they offer many of the advantages and benefits of a regular credit card without the risk of overspending and getting into debt. In the current credit crunch, it’s definitely worth thinking about.
So what does it involve? Think of it like a pay as you talk mobile phone. You load the card up with credit, and away you go. Here are some of the advantages to having a pre-paid credit card.
* No debt – it’s impossible to get into debt (one of the biggest risks of a regular credit card) because you only spend the money you’ve put on the card.
* No interest – this is a massive incentive, as the credit on a regular can soon mount up.
* Versatile - pre-paid cards can be used online, in shops, over the phone… In other words, exactly like a regular credit card.
* Safer - a pre-paid card is safer than carrying cash.
* Ease of approval – unless you’ve been involved in fraud, you will almost definitely be approved. This goes for under-18s too. Applying for a pre-paid credit card won’t affect your credit rating either.
So if you’re thinking about getting a credit card but don’t want to run the risks that a regular card presents, think about going pre-paid. Find the best deals at CreditCardExpert.co.uk.
06.27.2008 | 4:39 pm | credit cards
With so many different types of credit card out there, it’s often tricky to decide which is the best one for you. Like many people, you’ll probably be attracted to 0% interest introductory offers, so here are some tips to make sure you get the best out of the deal.
Types of 0% Introductory Offer
Before you decide which card to go for, you have to choose which 0% deal you want. There are two kinds. The first is the 0% balance transfer, which means you can move an existing debt onto the new card without having to pay interest on it for the duration of the introductory period.
Then there’s the 0% on purchases deal. With this card you won’t be charged interest on your purchases during the introductory period.
Mixing The Two
One possible problem with cards that offer 0% deals on both balance transfers and purchases is that the purchase period is normally shorter than the balance transfer period. This means that you’ll be charged interest on your purchases sooner. The problem with this is that none of your repayments will count towards clearing the purchase debt until you’ve paid your balance transfer debt. For this reason it’s best to use separate cards for transfers and spending, or get one with equal introductory 0% periods for both.
How Long is the Introductory Period?
Make sure you know how long the offer is for. It goes without saying that the longer the time period the better. Balance transfer periods used to be around six months, but you can get much better deals these days.
When the introductory period is over, you’ll be charged interest at the card’s standard rate. The best case scenario would be to clear the debt before the introductory period is over, but it’s best to go for the card which has the lowest standard interest rate just in case the best laid plans don’t come about!
05.18.2007 | 5:57 pm | Uncategorized
Profits of British credit card companies plummeted by 43 per cent last year when compared to the previous figures in 2005, it was revealed this month.
According to banking analyst Lafferty, profits for all collective UK credit card companies amounted to just £1.16 billion in 2006.
The fall in profits highlights just how much the industry relied on overcharging customers for fees such as going overdrawn or sending letters to customers, which were capped at £12 in spring 2006.
In the past year there has been much criticism of credit card companies over their attempts to introduce new ways of charging customers, which have been dubbed as cynical and unfair exercises by consumer groups.
The figures now put the UK credit market in the bottom third of global credit markets in terms of profit, with credit companies now only making an average of £16 per customer, compared with £27 per customer in 2005.
05.17.2007 | 5:40 pm | Uncategorized
Profits of the UK’s credit card companies have fallen by around 40 per cent over the past year, according to the latest statistics.
On average, lenders made an average of £24 per credit card issued last year, a decrease from the £27 annual profit per card recorded in 2005, making the UK the third-least profitable market for credit card companies.
In addition, the study carried out by the payments research firm Lafferty Group, overall profits in the UK credit card market fell by 43 per cent to £1.2 billion in 2006.
While profits are predicted to fall further over 2007, with total profits for the year of £1 billion expected, the market is likely to recover in 2008.
Part of the reason behind the falling profits is the recent ruling against excessive penalty fairs for late payments, which has benefited the borrower.
However, Lafferty also reported a rise in bad debts on credit card, with borrowers struggling to pay off the bills, highlighting the need for consumers to carefully consider the product they take out.
05.17.2007 | 5:39 pm | Uncategorized
UK consumers are increasingly living the high life, with credit card used to fund regular restaurant visits and the purchasing of luxury goods, it has been reported.
According to the most recent research carried out by Mintel, consumer spending rose to a record £1.09 trillion in 2006.
While home purchases continued to represent the biggest financial outlay by Britons, accounting for £4 in every £10 spent over the year, increasing amounts were also spent on luxury goods and lifestyle choices, such as holidays.
Of those questioned as part of the study, 23 per cent claimed that they were planning to take a major foreign break over the next year, while the amount spent on eating out grew by 18 per cent in comparison to 2002 levels.
“Rising disposable income has led to higher expectations about the quality of life, and as a result we are increasingly trading up and spending more on better quality, premium products and services,” said Neil Mason, senior retail analyst at Mintel.
Recent figures from the life assistance company CPP revealed that the average UK consumer will spend £157,530 on credit card over their lifetimes, with plastic being increasingly used to fund smaller, everyday purchases.
05.16.2007 | 5:47 pm | credit cards
Fashion chain Laura Ashley has been named as one of several high street culprits that have sent credit card to consumers who have not asked for them.
Stores which present credit card to those who have not requested one are acting within the law but have been accused of fuelling the UK’s current debt crisis.
GE Capital, who are responsible for managing around half the store cards in the UK, has already been branded as unethical due to its responsibility for high-interest store cards.
Often - as well as being easier to obtain than a credit card - a store card will charge a fee around ten per cent higher than most credit card, leaving borrowers to repay funds at a staggering 30 per cent interest.
There have also been problems in the past when high street stores were accused by the Competition Commission of failing to display the APR or other crucial details on the store card application.
The criticism comes just a week after it was reported that the common nature of debt in Britain means that many consumers are unfazed even by five-figure sums of personal debt.
05.15.2007 | 4:58 pm | Uncategorized, credit cards
Following a relatively quiet new year, UK consumers are increasingly spending on their credit card, according to the latest figures.
The trend comes as Britons have finally managed to pay off the debts from Christmas and began to feel more confident about spending again. One factor cited for the improved popularity of credit card is the recent ruling from the Office of Fair Trading concerning the penalty fees lenders are legally allowed to levy.
Following an investigation into the level of penalty fees, the OFT ruled that credit card companies could charge just £12 per occasion a borrower exceeds the limit on their card.However, lenders have begun to hit back in order to recoup lost profits. While some credit card companies have increased their interest rates or the charges for transactions carried out abroad, the Royal Bank of Scotland is currently considering charging its customers £12 should they fail to inform the bank about a change of address.
“I’ve never come across this kind of charge before,” commented Richard Mason, a spokesman for the price comparison site Moneysupermarket.
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