Posted by Tom Wilkins on Fri 10th August 2007 at 06:00 AM, Filed in Credit Tips
There are a myriad of credit card providers out there, deciphering which ones are the best isn’t easy.
Here are some things to bear in mind:
1. Think about what rewards you might want. E.g air miles, points for prizes, etc. Shop around to see what might benefit you the most.
2. Look carefully at APR (definition here), sometimes attractive introductory rates rocket after expiry of the specified period. Take a good look at the small print.
3. Are you a frequent traveller? If so, you really want to look at using a credit card that doesn’t charge transaction fees while abroad. Nationwide are hard to beat on this front.
4. I’m a sucker for a good looking credit card. Take a look at providers that offer bespoke designs - you might just be able to create something quite eye catching.
5. Check what cover you have for fraudulent activity on your card.
6. Check whether there is a transaction fee for transferring credit card balances. It’s usual for transaction fees to be levied on 0% intro APR offers.
The summer has been a wash out in the UK, hence the mass exodus to warmer climbs.
Early industry reports are suggesting that this exodus of Brits is packing more and more trusty credit cards with their sun block and swim wear. This is in spite of rising credit fees and warnings over credit over stretch.
According to research:
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1. Credit cards are a big time saver. i.e less reliance on cash and checks.
2. Perfect for internet purchases.
3. Credit cards are vital for making hotel reservations, car rental, purchasing airline tickets etc.
4. Can be used as an alternative form of identification.
5. When used sensibly credit cards can actually save money.
6. Added protection against fraud.
For those of you stumbling across this in a credit card offer here’s a definition:
“Performance (or Risk Based) APR is a variation on variable APR, but ibased on your payment performance. There is a standard APR when you open the account, but that APR will increase if you are late making a payment. If you are late making a payment more than once within a specified time (usually between 6 and 12 months), the APR may increase again. If the APR has gone up because of a late payment or late payments, it may go back to the standard APR if you are not late on your payments for a certain period (typically one year).”
All credit cards used recklessly can cause debt headaches. However, it appears to be no frills cards that are currently in the spotlight.
A leading Australian researcher from Cannex retail information says:
“It only takes a few slips to turn a low-rate credit card into a penalty fee devouring monster
Most of us get caught with credit card penalties on the odd occasion but consumers who regularly incur penalty fees due to household budget pressures are building their debt,” Cannex analyst Harry Senlitonga says.
“Consumers think they are doing the responsible thing by getting a no-frills card but it can defeat the purpose entirely if the account is not managed correctly.”
Evidence suggests that an interest rate of under 10 per cent rises to about 22 per cent over a year if two late payment penalties of $25 each and two over the limit penalties of $35 each are incurred. That can really add up.
Help might be at hand with international movement on this issue.
For instance British banks are having to reduce penalty charges on credit cards, and in some cases provide refunds in light of recent legal challenges.
