There are many different credit card choices available, and as financial credit is such a competitive market, there are some great deals around, often with added extras for the consumer. Changing your credit card is now easy to do, there are lots of good online comparison sites, and many credit card companies offer the bonus of zero interest rates on your balance transfer. Changing credit card providers can be a good financial move to take advantage of low interest offers, and not just an emergency tactic because your monthly payments are getting out of control. To be a 'credit card tart' (regularly changing to get the best interest rate) is common practice now, because we all recognise that it's best to shop around, rather than staying loyal (and paying for it), to one bank or company.
Choosing the best credit card for you: Credit card companies are very keen to get your custom, so most of them offer many incentives to attract new borrowers : low interest and 0% balance transfer rates, cash-back, air miles, free travel/purchase insurance, bonuses and points.
Low or zero interest rate: Choose the credit card provider that offers the longest 0% interest rate (usually 12-13 months) as this helps you pay off your debt with no interest. If you have a good credit rating, then consider changing credit cards again when the low or zero interest rate is due to finish. Apply for a new card at least six weeks before the old offer expires, so you don't risk pay having to pay high interest charges. This keeps your debt interest free. If you get weary of changing credit card companies, then opting for a 'life-of-balance’ transfer may be your best option. Such an offer is not likely to be zero per cent, but it will last longer, basically until your transferred debt is paid off.
Changing to a credit card with an interest reduction will save you money, but will not reduce your monthly payments because you choose how much you pay. Opting for the minimum payment will not get rid of your debt. Remember, the faster you pay off the debt, the more you save on interest. Be careful though as credit cards with low cost balance transfers sometimes have a higher purchase rate. So check before you sign up.
Legal protection: An advantage when using a credit card to buy goods or services between £100 - £30,000, is that the Consumer Credit Act (Section 75) gives you legal protection. You can claim against your credit card company if something goes wrong with your purchase. This 'connected lender liability' makes using your credit card with big purchases worthwhile, for your own legal protection. However, remember you need to pay it off by the end of the month to be financially wise!
Cash back: Credit cards that offer cash back, American Express Platinum is one example, refund a percentage of what you spend, which begins at 0.5%, and will vary according to the amount. This amount is generally deducted from the following month's purchases.These credit cards are useful if you are going to pay off the full balance every month.
Fees: Check carefully that there are no fees associated with a balance transfer, if you are planning on taking advantage of a zero orlow interest rate. Also check there is no annual fee,and the time period between being sent a statement and having to pay, before you sign up to any new credit card agreement. Some credit card companies charge 'withdrawal fees', (usually 2.5%), if you use your card to draw cash. It's also likely that your interest-free period won't apply to cash transactions.
It can be tempting to take out multi-credit card contracts, but credit rating agencies can monitor the number of cards you use and can request details of your credit card payments. This can affect your credit rating, if your prospective lender judges you as a bad risk due to too many credit card debts.
Once you clear your credit card debt you will be able to use your credit card as a shopping convenience, instead of it being a financial burden. If you pay off your balance in full every month, it should cost you nothing.
By: Fiona Howard