In the UK we have 60 million credit cards and two thirds of us have balances outstanding. In short, most of us are using a credit card and will be paying interest at some point, unless we are very disciplined. Therefore, it pays to know that you are getting the best credit card deals available. With well over 250 to choose from, how do you make sure you’re getting the best deal?
Reasons for a new credit card.
What are you looking to use a new card for?
1. Transfer an existing balance from another card to save paying interest?
2. Is your current card asking you for high interest charges?
3. Borrow for a new purchase?
4. Better add on benefits (eg travel insurance, cash back, discount vouchers) with another card supplier?
Credit cards can be the cheapest way to borrow if very short term. Where most of us go wrong is when we buy more stuff than we can afford and don’t stay on top of our repayments each month.
Top Tips for credit cards.
Protection on purchases
If you buy something worth over £100 on a credit card (not a debit card though!), the card issuer is equally liable if something goes wrong. Eg,
• Book a holiday or flight and the operator goes bust
• Buy an electrical good on line and it’s faulty
• Ordering something on line that never gets delivered to your home
You have that extra protection from the card issuer, as they are jointly liable. There is even a case where someone bought a car, paid the first £100 deposit on credit card and when things went wrong, they were protected for the whole purchase!
0% Balance Transfers
You can move your balances to other cards that are offering 0% balance transfer deals. In other words, you can use one card to pay off another. However, look out for a probable small fee of around 3%. You can currently get nearly two years interest free for swapping.
Swapping between your own cards.
Many people do this but you need to be organised. Make diary notes on your phone or somewhere to make sure you swap from card to card in time. Otherwise, you can be hit with extra charges and it will undo the good you were trying to achieve. It’s worth calling up your current card issuer and try to negotiate a better rate or a swap to one of their cheaper cards. If you are looking to transfer to a new card, allow 6 weeks before your current 0% deal ends to sort out a new card.
Cash back Credit Cards
Some cards will pay you up to 5% cashback on purchases made with your card in the first 3 months. If you’re planning a lot of spending, eg moving house and making new purchases, you stand to save 5% on all you spend. Other cards will offer you petrol discounts and supermarket discounts. Roughly, you’ll save 3% on fuel, 2% in department stores and 1% in a supermarket.
Credit Card Free Stuff
You’ll be amazed at what you can have for nothing if you take out new cards, use them and then cancel them or just sit on them. Look online for free air miles, cashback (£3 back for every £100 spent), Eurostar, vouchers with high street shops and much more.
‘Bad Credit’ Credit Cards
All banks and card issuers have different criteria as to whether you are their type of customer. If your application has been turned down by one card issuer, don’t panic. If you apply to a stack of other card issuers, you could make your credit score worse. Instead, try and sort your credit score out first and then phone new card issuers to see what sort of customer they are taking on.
Make sure you ask these questions:-
APR for purchases, cash advances and balance transfers?
Fees; annual, late payment, over the agreed credit, cash advance, balance transfer?
How many days interest free from date of purchase of goods?
What is your credit limit and cash advance limit?
What are the offers and when do they expire?
Ask about the freebies!
Right now, check these out:-
Barclaycard – 22 months at 0% with a 2.9% fee, or 16 months with a 1.6% fee.
Halifax – 2.9% for 16 months, no fee.
Sainsburys low long term rate 6.9%, no fee.
How to go about applying for a credit card.
As we have already said above, it’s best to check your credit score (see link above) first before applying; try Experian or Equifax. If you’re ready to go, it’s usually easy by just applying on line, at your bank or by phone.