Andy Britchford at moneyfacts.co.uk offers a variety of options for those of us who pay credit card balances at the end of the month.
“As the problem of indebtedness in the UK worsens, every day we either see advertisements in the press for the ‘best deals’, or have our door mats littered with ‘tempting deals’, with every company seeming to boast that it has the best credit card, loan rate or debt management solution.
“But not everyone uses a credit card in the same way. Many consumers don’t ‘carry over’ a monthly balance on their credit card, and therefore do not pay any interest charges. For these customers, the features they look for in a credit card deal are very different.”
“As the interest rate is not an important factor for those repaying their balance in full every month, the number of interest free days, donations, loyalty schemes and cash back deals are more likely to influence their choice of plastic. Of course these additional features would probably appeal to the majority of consumers, but for those holding a balance the number one priority must be to secure the cheapest deal in terms of interest rate.”
“Today, around 80 ‘incentive ’ based credit cards are available, offering a variety of loyalty reward schemes and cash back deals. If you can be disciplined enough to use your credit card for your day to day purchases, while keeping the money aside to repay your statement at the end of each month, then it can be a win win situation. The beauty for the savvy consumer is that they can earn interest on the savings for that month, as well as receiving cash back or incentives ‘free of charge’ from your credit card provider.”
“So, if you are one of these customers that credit card companies make no money from, what deals are available?”
“Typically on a cash back deal, you can expect to receive between 0.5% and 1% of your credit card spend. So spending £10K on your credit card during the course of a year could earn you £100, not a bad return for doing nothing!”
“Loyalty schemes vary between lenders, both in the collection of points against spend and also in the conversion rate from points to value of goods. But it is important to remember that loyalty rewards are only good if you use them, there is no point choosing the highest reward scheme if the points can not be redeemed with retailers which you would use.”
“If you are not someone who pays credit card interest, why not take the opportunity to make some money from your card provider; after all it’s nice to be able to turn the tables every now and again.”
According to Newsnet5 Local authorities in Ohio are looking for a man accused of stealing credit cards and using them in a spending spree amounting to more than $100,000.
Apparently, surveillance video captured the man leaving a Target store in Streetsboro. In understatement of the year Police said “he has expensive tastes when he shops with the stolen credit and debit cards.”
“He’s going big ticket, plasma screen TVs, electronic equipment, and then he goes to the banks to get cash advances upwards to $14,000,” said Twinsburg police Lt. Jeffrey Nash.
In a statement of common sense the Association of British Credit Unions (ABCUL) has recommended that “consumers worried about debt problems and issues could be far better off taking out a personal loan rather than a credit card if they are looking to raise finance.”
The Association claimed that the “set repayments associated with personal loans made debt management and repayment far easier and more manageable for those worried about effective budgeting in relation to their debts.”
I guess the issue here is that everybody needs to tailor their personal credit to their own situation. Contrary to some of the negative press, using a credit card can be a very effective form of borrowing if used correctly.
(Via UK Personal Loan Store)
According to payments Association Apacs, debit cards are being used more than credit cards in the run up to Christmas.
“Spending on debit cards is predicted to increase by £3.4 billion to £20.4 billion in December, while credit card expenditure is predicted to hit £11.4 billion.”
However, online trends indicate that credit cards will make up 67% of the total £3 billion spent on plastic via the internet in December.
Sandra Quinn, director of communications at Apacs, says: “Overall our penchant for plastic continues and it looks as though this Christmas our plastic cards will continue to replace cash and cheques for our festive purchases. Over recent months we have seen that cardholders are becoming more responsible in the way that they borrow, reining in their spending and focusing on repayments.”
(Via QCK.com)
With UK banks being squeezed over unfair charging, I guess it was only a matter of time before we would end up paying elsewhere to plug the gap.
According to Easier Finance:
“Following the OFTs cap on fees, card providers will need to reintroduce annual card fees of up to £35 or raise interest rates by up to 2% to recoup losses estimated at £1bn, claims a report issued by PricewaterhouseCoopers (PwC).”
Michelle Slade, analyst at moneyfacts.co.uk comments: “Credit card providers have not been slow to react. In the three months following the OFT intervention, Moneyfacts researchers found 19 card providers increase interest rates by an average of 2.5%. With some unlucky customers facing rises of 5%, 6% and even as much as 12%, so it looks as if the £1bn reclaim is already well under way.”
“The trend of introducing card fees has also begun. Recently Lloyds TBS launched a new card, Premier Amex with a £4.95 per month fee available for Premier Current Account customers, offering a comprehensive range of benefits. But more interestingly, last week Co-operative Bank announced that for new and existing customers, their Platinum Tracker and Northern Rock Base Rate Visa would both carry a £2 per month fee. So while the Co-operative received special attention, in cutting its default fees to below the OFTs recommended £12 threshold, with default fees lowered to £11, this recent introduction of a monthly fee will prove unwelcome news for their customers.”
