Over stretching of debt is becoming a ubiquitous problem in the UK. This precarious situation has been given further credence by recent figures suggesting that 4.2m people in the UK are still paying credit card bills from Christmas last year.
That’s a very worrying statistic if you consider what a pricey form of debt credit cards are.
According to Moneyexpert.com further data reveals that the average UK resident was unable to wipe off their Christmas debts until March 2006.
Sean Gardner - Chief Exec of Moneyexpert said:
“Getting into debt is fine as long as you have the means to get out of it.” Stating the obvious, but how many of us are still falling into this trap.
Shopping at ASDA (the UK supermarket) with an ASDA credit card just got a whole lot cheaper with the introduction of a whole raft of new benefits which include:
• Customers will get 2p off every litre of fuel at Asda petrol stations if they use their card to pay.
• 5% off all purchases at standalone Asda Living and George stores.
• 0.5% cashback on every purchase made wherever the card is used and redeemed in the form of Asda vouchers
• There is also free delivery on all online purchases over the value of £50 made at asda.com.
The Christmas cheer is that all existing cardholders will have the new benefits automatically applied. New cardholders are also being offered a balance transfer offer of six months’ interest-free credit, but there is a 2%c charge on the amount transferred.
Purchase rates vary from 14.8% to 19.7% depending on your credit rating, with the typical rate standing at 16.8%.
(Via This is Money)
If you own a credit card in the UK then here is some info you should know.
1. There are over 500 branded credit cards available in the UK.
2. All available credit cards are operated by three networks - Mastercard, Visa and American Express.
3. All credit card applicants have their credit ratings checked through agencies such as Equifax and Experian.
4. Things that can act for your application include: paying back debts on time, long stable relationships with banks.
5. Things that can act against your application include: County Court Judgements against your name, frequent changes of address and no credit history.
6. Credit cards can start charging either at time of purchase, or time of debit or even from the date on the statement. (Something to be aware of when signing up to your chosen provider).
7. Repaying your account in full can mean that the next month is interest free up to a certain level.
8. Very low interest cards sometimes have a sting in the tail. i.e penalties of up to £20 if the monthly payment is as much as a day late or your credit limit is exceeded.
9. Under the 1975 Consumer Credit Act, the bank issuing your credit card is held jointly liable with the supplier if goods bought on your card are shoddy, lost or not what you ordered - this applies to purchases between £100 and £30,000.
10. Goods bought on debit cards are not covered under the Consumer Credit Act.
11. Most credit cards claim to offer security against internet fraud. However, few providers point out that you are already only liable for up to £50 if your card is used fraudulently, unless you have been grossly negligent.
12. Some service providers, including theatres, taxi firms and ticket-booking agencies, levy a surcharge or handling fee for paying by credit card. This can be at any level they decide, but you must be informed before payment.
13. Using your credit card to withdraw money from cash machines can cost up to 1.5% in handling fees for each withdrawal.
14. Credit cards can be cheaper to use abroad than buying foreign currency. There are many cards that include a foreign usage charge on each purchase, however, currency exchange will be at a wholesale rather than a retail rate. Nationwide is one of the few providers to offer a credit card that does not attract charges abroad.
(Via Moneypages)
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 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)
