Credit Cards
Tips for Choosing a Credit Card
Whilst many of the credit card providers have withdrawn from the market in the last couple of years there are still a number of good quality options existing for those looking for a new provider or a balance transfer deal.
With so many options it is important to know how you plan to use the card before selecting which one is right for you. Many providers are looking to attract new users so provide a balance transfer deal where an existing card balance can be transferred and enjoy an interest free period. Although there is a fee payable (up to 3% of the amount being transferred) it can still work out to be a cost saving deal provided you understand how new purchases will be charged. Providers such as Virgin and NatWest have 14 or 15 month 0% balance transfer periods and a further 3 month 0% charge for any new expenditure. Once this has passed, any balances will be charged at around 17% APR. The Virgin card also has a reward incentive of discounts on Virgin Media and other products.
It is still possible to get a cash back card where you earn a rebate on spend. Only Amex, Barclaycard and Capital One have such an offering with Amex providing up to 5% cashback for a limited period. Barclaycard have now moved to a Freedom programme where reward money can be earned and redeemed at participating stores.
If you want a card that has the maximum interest free period then look to the Barclaycard Platinum Purchase or Virgin 12/12 cards. These both offer 12 month balance transfers (for a fee of just under 3%) and a 12 month interest free period on new purchases. Both have their own version of rewards or discounts too.
Even customers with a poor credit history can apply for a card that helps them rebuild a record of better financial management. Capital One offer a programme where the interest rate charged reduces from the standard 34.9% for satisfactory management of the account.
Those with a more conscientious outlook can ensure contributions to a range of organisations by applying for one of the wide range of charity supporting cards. Unicef, World Wild Life Fund, British Heart Foundation, RSPCA, Breakthrough Breast Cancer, RSPCA, Dogs Trust and The National Trust all offer cards where the more you spend the greater they benefit.
Clearing the existing decks with a debt consolidation loan may be a more effective way of managing existing card balances than looking for a balance transfer deal. This allows you to pay off all existing balances with a new fixed rate term loan and leaves you clear to start again. Providers are now wary of so called `card tarts` that shop around and jump for the latest best deal so debt consolidation and careful selection of a new provider may be a better option.