Don’t be frivolous with your credit card

Credit cards are something of a double edged sword to most people. On one hand they are able to help people out of money problems, providing a financial lifeline and helping them when they have severe cash flow problems. On the other hand they are the essence of temptation and can lead people into spiralling levels of debt that can result in financial disaster.

Many industry experts have urged consumers to learn how to use credit cards properly. There are many ways in which you can benefit from credit cards, such as being able to enjoy the convenience and ease of avoiding carrying cash, being able to pay for larger items and then repay the balance gradually, and being able to tide themselves over during difficult times.

However, there are many people that take out a credit card simply because they want to spend unnecessarily rather than for the convenience, ease, and flexibility that these cards offer. Many people that are approved for a credit card will go out of their way to spend on it and often buy things that they do not particularly want or need simply because they are able to do this.

This frivolous spending is partly what has landed the country in huge levels of personal debt, with consumers taking out loans and credit cards to buy all sorts of luxuries, pay for holidays that they cannot really afford, buy the latest gadgets and high tech devices at high prices, and even using their new found ‘wealth’ to treat other people to things. For many having a credit card only involves looking at how much they have to spend rather than how they will repay the money and how much they will have to pay because of interest.

A recent report has shown how many people that apply for credit cards are more concerned about how much money they will get in terms of their credit limit than how much they will be charged in interest. This is because so many people are planning to use their credit cards to spend, spend, spend, rather than use what they need to and then get it cleared quickly and at a low rate of interest. Many people spend on their cards needlessly even when they are paying high rates of interest, which is something that can quickly lead to spiralling debt levels that become impossible to manage.

Tags: sword, financial disaster, luxuries, low rate, Credit Cards, Credit card, consumer, frivolous spending

Millions have a year or more of debt on their cards

It has been reported that millions of borrowers in the UK have outstanding credit card debts of a year or more, with many only managing minimum repayments on their debts in the current outstanding climate. According to the report more than six million people have had an outstanding balance on their credit cards for at least a year.

Research was carried out by moneysupermarket.com, and officials from the firm claim that almost 10 percent of people admitted to paying only the minimum amount off on their credit card debts each month. This has resulted in 14 percent of cardholders having debt on their credit cards for over five years, with the minimum repayments barely covering the interest on their debt.

Industry officials have warned that those paying off their debts with just the minimum repayment each month will not only spend years longer repaying the debt but will also pay a huge amount in interest over the term of the debt. However, in the current financial climate following the credit crisis and recession many cannot afford to pay any more than the minimum.

The average length of time that a balance is left outstanding on a credit card according to the survey results is twenty one months, and officials want to ensure that consumers understand the repayment structure and the consequences of minimum repayments.

An official from Moneysupermarket.com said: ‘Our research reveals credit cards are still playing an important role in the nation’s finances, but in the current climate, it’s more important than ever for consumers to understand the cheapest way to borrow on their cards and avoid getting stung by high interest rates. The most important thing is that consumers understand the implications of borrowing on a credit card and that paying back the minimum amount each month will dramatically increase the total amount they pay back in the long run.’

Tags: credit, Credit Cards, outstanding credit card, Moneysupermarket.com, high interest rates, Credit card, debt, cheapest way

Further increase expected with credit card interest rates

Over recent years there has been a lot of controversy with regards to the high rate of interest that is charged on many credit cards, with campaigners, consumers, and various other officials pointing out that the gap between the base interest rate – which is at its lowest level on record at just 0.5 percent – and the average credit card interest rate was getting wider and wider.

Whilst the base rate has been at its all time low for well over a year now credit card interest rates have continued to increase, leaving many credit card customers who are unable to settle their balances in full at the end of each month facing very high levels of interest on their debts. However, despite the controversy it appears that the problem could be set to get worse.

According to reports experts from the credit card industry are predicting that credit card companies are set to increase credit card interest rates even further, and this could further impact on the finances of many people that are already struggling to stay afloat. Experts believe that credit card providers will increase their rates in order to offset the risks that they are having to take.

Recent research showed that over five million consumers in the UK had admitted to using their credit cards on a regular basis to make bill payments and other essential payments, and this means that the higher interest rates could take their toll on many people.

A spokesperson from Moneyfacts.co.uk said: “Providers have been putting rates up and obviously there’s high unemployment and the risk of people defaulting and not repaying their debts is still quite high, so they’re very strict on who they give their cards to. The customers that pay off just the minimum every month are going to be the ones who are hit hardest. They’re going to add, maybe, hundreds of pounds extra on to their debt and take a lot longer to repay [it].”

Tags: rate of interest, personal finance, Credit card, credit card interest rates, risk, Credit Cards, increase, interest

Virgin Money makes changes to repayment system

Many Virgin Money credit card customers have been pleased to hear a recent announcement from the financial giant with regards to the repayment allocation on its credit cards. Virgin has announced that as of the start of September any repayments made on the Virgin credit cards will be allocated to the more expensive debt first, which could potentially save credit card holders a fair amount in interest.

Under the current repayment system, as is the case with many credit card providers, anyone that repays their debt gradually on the Virgin credit cards will see the repayment being out towards the cheapest debt first, which is often interest free debt. This means that more expensive debts that have high interest rates can be left to faster and continue accruing interest, which means that customers often end up paying out more.

The move to make credit card providers allocate customers’ repayments in this way has been pushed by regulators and financial authorities in the UK following similar moves that were taken in the United States. However, whilst lenders who offer credit cards will have to adopt these measures eventually many have surprised customers by bringing in the moves earlier than was necessary.

Virgin Money has become one of a number of credit card providers to bring in the changes to the allocation of repayments earlier than they needed to, and collectively customers could save a huge amount on interest as a result of these changes being made early.

One customer said: “I think its great that Virgin have decided to take this action early, because it will allow customers to save a fortune on the interest that they would otherwise have to pay.”

Tags: Virgin Credit Card, credit, business, current repayment system, way

Charities want banks to extend offer of services

A group of charities is urging banks in the UK to extend who they offer their services to, with officials from the charities stating that millions of people are being excluded from using banking services. Read more

Tags: Credit card, Payday loan, Better Banking Campaign, basic banking services, overdraft

Holidaymakers could benefit from credit cards

Many holidaymakers in the UK that head off on holiday each year use credit cards to make payments for purchases, and one recent report has suggested that this could prove to be an ideal solution for holidaymakers. Read more

Tags: britons, sums of money, rate, recent report, Credit card, Debit card, cheque, consumers

Credit card borrowing increased in December

Figures that have been released recently have shown that for the month of December the level of credit card borrowing increased, leading to an increase in overall consumer borrowing. Read more

Tags: Value added tax, bank of england, small increase, consumer debt, end, sector, Credit card, consumer spending

Banks urged to provide services to those that are excluded

A group consisting of charities and local groups is urging banks to extend their services to those that are currently excluded from a wide range of banking services, such as current accounts, basic bank accounts, credit cards, loans, and overdrafts. Read more

Tags: quarter, interest rates, overdraft, priority, Credit card

Tips to make 2010 a money saving year

If you are one of the many people that have decided that their New Year’s resolution involves cutting back on costs and saving money then you may still be thinking of ways in which you can achieve your goal. Saving money and cutting back on your outgoings isn’t always easy, and you may have to think carefully about the different areas in which you can make cutbacks. However, there are actually a number of ways in which you can save money, and some of these are outlined below. Read more

Tags: insurance policies, insurance market, Direct debit, interest, finance, Credit card

Supermarkets offering better deals on credit cards than banks

A recent report has claimed that on average supermarkets tend to offer better deals on credit cards these days than banks, which means that consumers can often get a great deal on a credit card simply by heading to their local supermarket rather than trawling through the websites of the various High Street banks. Read more

Tags: cash gifts, report, Spencer, personal finance, loyalty points, lending criteria, local supermarket, Credit card

Credit card industry speaks out against government proposals

The credit card industry in the UK has spoken out against one of the measures that has been proposed by the government to try and curb some of the practices used by credit card companies. One of the measures that the government has proposed in order to reduce problems relates to the credit limits that credit card providers offer, and the aim of the government was to try and get credit card companies to reduce these limits. Read more

Tags: personal finance, interest rates, Credit history, UK Cards Association, Credit card, Stoozing

Many don’t realise costs of using prepaid cards

According to a recent report many low income consumers in some of the poorest areas of the country are having benefits paid onto prepaid cards, but fail to realise the high costs that can be involved in doing this. Concern has been expressed by officials from the Department for Work and Pensions over the lack of awareness amongst consumers when it comes to the charges involved in using prepaid cards for such purposes. Read more

Tags: Prepaid, Stored-value card, Payment systems, prepaid credit cards, Credit card

False sense of security for consumers being asked for minimum repayments on credit cards

Experts have recently expressed concern that many credit card customers may be getting lulled into a false sense of security as a result of credit card companies asking for very low minimum repayments on their credit card balances. Read more

Tags: Credit card, debt, credit, Stoozing, lloyds tsb, Lloyds Banking Group PLC

Save yourself some money this Christmas

Whilst Christmas is now only around the corner there are still plenty of people that simply haven’t had the time or spare cash to get their Christmas shopping done as early as they may have liked to have done it. Read more

Tags: Gift economy, Loyalty program, christmas, online shopping, Consumer behaviour, Retailing

Card fraud goes down whilst banking fraud increases

Recently released figures have shown that whilst credit card fraud in the UK has been going down, which will come as a relief to the many cardholders that have been fearful about becoming victims of this sort of crime, the level of online banking fraud has been increasing. Read more

Tags: business, losses, level, credit card fraud, banking fraud, pin technology, Credit card

Consumer White Paper – Protection For All Consumers

The consumer White Paper, which outlined proposals to but a stop to unscrupulous lending by credit card companies, also contained measure to strengthen the rights of ALL consumers- those who feel ripped-off or conned. Read more

Tags: better deal, MP Kevin Brennan, cannot, rogue traders, paper, Credit card, consumer protection, Trading Standards Institute

Online Banking fraud levels on the up

These days more and more people are using online banking facilities in order to carry out their banking transactions, and with an increasing number of banks offering these facilities online banking has become very popular amongst those with busy lifestyles and lots of commitments. Read more

Tags: APACS officials, Credit card, online, credit card fraud, keylogging, apacs, fraudster, bank fraud

Many jobs to be affected by credit crunch

Most people are sick of hearing the term ‘global credit crunch‘, but sadly this is s term that many of us have had to get used to over the past year. Read more

Tags: doubt, job sectors, credit crunch, negative equity, loss, little access, job losses, Credit card

Banks could make billions from increasing profit margins

According to a recent report many of the UK’s major banks could end up making billions of pounds in extra profits by increasing the margins on loans and mortgages. It is thought that the banks could end up making around £3.6 billion as a result of these increases, so although the Bank of England base rate has fallen from 5.75% to just 3% over the past year the banks are still set to make huge profits. Read more

Tags: Loans, bank profits, Economic history, money products, Credit card, profit margins

Whistleblower claims – “Employees at RBS being trained to lie”

According to an insider from the Royal Bank of Scotland employees at the bank are being trained to lie in order to stop customers from cancelling the Payment Protection Insurance on their credit cards. The whistleblower is apparently from the bank’s Customer Loyalty Team, and said that employees are trained to use a number of practices to stop customer from cancelling PPI on their credit cards. Read more

Tags: call, rbs, ppi, ongoing investigation, cancel accounts, Credit card, authority, consumer

Can you benefit from being a credit card rate tart?

There are so many different types of credit cards in circulation in the UK these days it can be difficult to determine which one might best suit your needs and circumstances. However, for some people getting value for money on credit cards means chopping and changing cards regularly to make sure that they are always getting the best rates, deals, and rewards. As a rate tart you can not only enjoy the convenience, flexibility, and benefits of credit card use, but you can even make money and rewards from spending on your credit card. Read more

Tags: Credit card, United Kingdom, rate tarts, business, Credit Cards, personal finance, free credit card

Younger people ‘nonchalant’ about their cards

Younger people seem to be less concerned about keeping their credit cards safe from fraudsters, a new report has suggested.

Two thirds of those aged under 50 said they had reported a credit card stolen compared to 78 per cent of people aged 50 years old or over, according to research by Saga.

Furthermore, a “massive” 88 per cent people aged between 18 and 34 years old said that they did not raise an eyebrow if someone took their credit card out of their sight when they were making a payment.

This is in contrast to 65 per cent of over 55 year olds saying they would not kick up a fuss in the same situation.

Andrew Goodsell, chief executive of Saga, commented: “Our study shows a worrying trend that men and younger people are generally less concerned about ID fraud than their older counterparts, and are not taking the steps to prevent fraudulent activity.”

This comes just after recent warnings from Apacs for people to make sure they keep their PINs safe.

Tags: apacs, someone, fraud, economics, pins, Credit card

Interest rates ‘may drop to 4% in 2009′

Although recent predictions suggested that the Bank of England interest rate would remain unchanged, an expert has said that it could drop to four per cent in 2009.

Howard Archer, chief European and UK economist for Global Insight, said that the Bank of England will almost certainly keep interest rates at five per cent this Thursday.

Mr Archer predicted that rates are unlikely to drop before August at the earliest, however he also said that they may drop next year.

“We still believe that interest rates could eventually fall as low as four per cent in 2009, but it will be a gradual process,” he commented.

However, he also said: “The bank will want clear evidence that wage moderation is continuing and that reduced demand is undermining companies’ pricing power.”

In related news, net credit card lending rose by £100 million in April, although this was still below the increase in March, according to the bank.

Tags: gradual process, Global Insight, credit, credit card lending, bank of england, March, Credit card, Pricing

ID fraud insurance policies increasing

The number of ID fraud insurance policies has been growing in recent years as ID theft has become more prevalent, but many people still have not considered taking out this kind of insurance, Equifax has said.

According to the company, many people do not think they will be affected by ID fraud and therefore do not take out an insurance policy against it.

The UK’s fraud prevention service CIFAS said that 77,500 cases of ID fraud were reported last year.

In February 2008, research from the insurance company CPP found that London is the worst place for credit and debit card fraud and theft, with 20 per cent of Londoners reporting that they have had credit cards stolen and 28 per cent saying they have been a victim of credit card fraud in the past.

Neil Munroe, external affairs director of Equifax, said: “There are more policies out there and they are quite varied in what they cover, from basic support to more involved support, but they do vary in terms of what they will offer you.”

Tags: Credit card, Ethics, UK's fraud prevention, external affairs, Insurance, service cifas, Neil Munroe, ID fraud

British turning to overpriced “payday loans,” says expert

British consumers are increasingly turning to “payday loan” providers, which offer loans at annual percentage rates (APRs) of up to 1,355.

The loans, which are popular in the US, pay customers up to £750 into their bank account with an agreement to repay the loan at the end of the month when their paycheque arrives, according to a financial expert at fool.co.uk.

However, they typically charge £25 for every £100 borrowed, rising to £31.25 if the customer fails to pay it back on payday and can reach £1,400 if a borrower does not make any payments for a year, claims the website.

“These truly ugly loans are overpriced, overused and over here. Brits are falling victim to this form of borrowing when they should be fleeing from it,” Laura Starkey, a financial expert at price comparison site fool.co.uk, told the Independent.

To survive the credit crunch icWales.co.uk advises people to cut down on car journeys to save petrol, switch their utilities supplier and change credit cards to get the most competitive rates.

Tags: comparison, Credit card, To survive, price, utilities supplier

Credit card holders could face 10,000% interest on one pence

Credit card holders who have one pence on the balance of their credit cards could face being charged up to 10,000 per cent interest.

US financial service providers Citibank, who own Egg the company who laid off 161,000 customers, announced it will increase the minimum interest charge for its 900,000 UK customers from 50p to £1 in May.

This means that a customer with one pence outstanding on their bill would be charged £1 – nearly 10,000 per cent interest.

Speaking to the Times, Sean Gardner of comparison firm Moneyexpert said: “Minimum interest charges are commonplace, although the details are typically hidden deep in the terms and conditions of your credit-card application.”

New figures from the Bank of England show that the average credit-card interest rate has increased to 17.67 per cent from 16.98 per cent a year ago.

Halifax, Bank of Scotland, Intelligent Finance and Egg, impose a minimum 50p charge for customers who pay interest on their bill.

Now Citigroup and Barclays charge a minimum of one pound.

Tags: May, Credit card, scotland, citibank, Sean Gardner, bill, Intelligent Finance, firm

Over £9 bn wasted by UK spenders in tax payments

Almost £9.3 billion is wasted by UK consumers through unnecessary tax payments, one financial expert has claimed.

The amount wasted in tax will increase by almost £1.4 billion compared to 2007 shows research from Unbiased.co.uk.

Up to 82 per cent of consumers admit to do nothing to reduce their payments, despite over 34 million people expressing dissatisfaction with the extra costs.

David Elms, chief executive of Unbiased.co.uk, said that tax payers are wasting record sums.

“We estimate that each UK tax payer will waste an average of over £290 in tax payments this year,” he stated.

The findings shows that unnecessary Inheritance Tax (IHT) payments are set to rise by over £360 million in 2008, resulting in a predicted total waste of over £1.9 billion.

This is despite IHT being named the most resented tax by one in five UK adults said the survey.

Further research from the company showed that 70 days of an average consumers annual wage is spent on clearing interest on credit card and loan debts.

Tags: card, uk, Unbiased.co.uk, Inheritance tax, consumers annual wage, executive, dissatisfaction

Consumers need to ‘understand the whole product’ when buying a credit card

Spenders need to know what they are getting when they shop for a credit card, one financial advisor has claimed.

Credit Action said consumers need to take some time and effort when choosing a credit card, just as when choosing a car.

Chris Tapp, director of Credit Action, stated that people need to understand the principle behind cards, which is to make sure that the amount borrowed on it can be paid off the following month.

“That is the way to avoid getting hit with all kinds of charges, to make sure you are only borrowing as much as you can pay back,” he said.

He added that the main thing to look for is the headline rate and to compare this rate of the interest between card providers to ensure the best deal is found.

Meanwhile, MoneyExpert.com research released at the beginning of the month shows that 3.2 million spenders own five or more credit cards and 28 per cent of us applied for more plastic last year.

Tags: interest rates, rate, Credit card, credit, choosing, financial advisor, headline rate, Credit Action

Holiday dangers for credit card users

Holidaymakers are at a growing risk of credit card fraud when they are out of the UK, new research has warned.

Data published by Apacs this week shows that using credit cards in countries with less secure identity verification than the UK – particularly those which have not adopted Chip and PIN technology – puts consumers at greater risk of fraud.

“The Apacs figures show a staggering £90.5million rise in fraud abroad with UK cards being targeted in countries where Chip and PIN hasn’t yet been adopted”, said Neil Munroe, external affairs director at Equifax.

Cloning is a particular risk, Equifax claims, advising travellers to take as few cards away on holiday with them as possible, and never to let someone process a card payment out of their sight.

“ID and credit card fraud is a very real threat for consumers, making it essential that they take sensible precautions to protect themselves. Armed with the right knowledge, consumers can help minimise the risk of fraud and take fast action if they do become victims,” Mr Munroe added.

Tags: consumers, Credit card, credit card fraud, card, GBP, chip and pin, Travellers, staggering £90.5million rise

Credit card holders warned about buying abroad

People who intend on using their credit cards to make purchases abroad have been given advice by one expert to help them avoid losing money.

Mark Bowerman, a spokesperson for UK payments association Apacs, urged people to ensure that they know who they are “dealing with” and that it is a “reputable company”.

For transactions between £100 and £30,000, it is “beneficial” to use a credit card because it will offer greater “protection” than a debit card, Mr Bowerman explained.

For consumers who have made purchases that turn out to have been for counterfeit goods, the “normal route” to be reimbursed is to approach the retailer, as this is usually “easier” than going directly to the card issuer, he stated.

“If there is no one to approach, then you can approach your card issuer, explain the situation to them and then they are liable for that amount of expense so you are refunded by them,” Mr Bowerman remarked.

Apacs is the UK trade association for payments and organisations that [rvide payments services.

Tags: card issuer, apacs, spokesperson, UK trade association, Credit card, Mark Bowerman, mr bowerman, Credit card holders

Londoners spend the most on loved ones

London males spend an estimated £2,458 on their loved ones per year, double the national average, according to the latest figures.

Findings from moneysupermarket.com show that women spend £659 on their partner each year while men fork out £1,326 on items such as anniversary gifts, dining out, flowers and special holidays.

According to the figures, female and male Londoners spend an average of £1,776 on each other compared with those in the north where £873 is spent.

Richard Mason, director at price comparison site moneysupermarket.com, said: “People might laugh at the north where the starry-eyed spend is less than half of that in London, but £873 a year is still a pretty respectable figure.”

“And it’s the Midlands that has the dubious honour of having three per cent of people spending nothing on their partner,” he added.

The research also found that British males spend seven times more on gifts for their partners than on extras for their cars, which came in at £191.

Further findings from the firm show many Brits miss out on the significant tax-free savings available in Individual savings accounts.

Tags: nothing, individual savings accounts, Richard Mason, london, Credit card, Driving, spending, Human Interest

Having multiple credit cards ‘can be confusing’

Having a number of different credit cards can be “confusing” for spenders, claims a consumer guidance charity.

The Consumer Credit Counselling Service (CCCS) said that there are many reasons for people having more than one card – plastic may be used for work, one could have a transfer balance with a low interest rate and another one could be used for purchases.

However, James Ketchell, spokesperson for the CCCS, said: “It can become confusing and people have to really stay on top of their credit card spending and finances as a whole”.

He adds that in the UK, the economic model is similar to the US more than Europe due to the ease with which credit can be obtained when making purchases.

According to a report by Datamonitor, the average Briton held 1.4 credit cards at the end of 2006.

This figure is twice as many as second place Norway, while the UK has the highest number of payment cards overall – 2.8 credit or debit cards each.

Tags: Credit card, different credit cards, consumer guidance charity, Debit cards, europe, US, Debit card, charity

Consumers need to be wary credit card fraud

Consumers need to be wary of credit card fraud when paying for goods in shops, one security expert has claimed.

The CPP warned that there is a risk that sometimes businesses work in collusion with fraudsters to deceive customers by using two machines – one that they skim the card through before putting it into the chip and pin machine.

Danny Harrison, a security expert at CPP said: “It’s something we need to be careful of. If somebody does take a card we need to be watching what they do with it.”

He added that chip and pin machines can easily be fitted with cloning devices but it should also be easy to recognise when a device has been tampered with.

According to research conducted by CPP, nearly one in five consumers have had their card cloned when using either an ATM or chip and pin machine.

The number of fraud and forgery acts committed in England increased dramatically in 1999 when compared against the number of cases during 1993 to 1999.

Tags: United Kingdom, security, Payment systems, Technology, Credit card, machines

Consumers need to be on the electoral register to avoid bad credit rating

Consumers could receive a bad credit rating if they are not on the electoral register, according to experts.

Equifax, the credit checking service, said that younger people in particular should ensure they are registered as a poor credit rating could prevent them from being approved for a loan.

Neil Munroe, external affairs director at Equifax, said: “You need to be identifiable, and the electoral roll is still one of the key areas that is used to identify somebody.”

“So you need to make sure you’re on the electoral roll if you’ve not been voting,” he warned.

According to Equifax, when checking credit ratings lenders are also ensuring that the consumer is the person they say they are in a bid to combat increasing instances of identity fraud.

In 2006 the Department for Constitutional Affairs estimated that there were at least 550,000 unregistered voters in London.

Figures from the body revealed that one in four Londoners under 24 were not registered to vote compared with only two per cent of over-55s nationally.

Tags: key areas, somebody, bid, roll, particular

Consumers need examples of what they will have to pay back

Banks and credit card companies should provide a “practical example” of what a consumer needs to pay back, claims a debt counselling service.

Thomas Charles & Co has said companies should follow the examples set by mortgage lenders and unsecured loan lenders and show consumers what they will be paying back over a certain period of time.

“I think banks and credit card providers should be encouraged to do that off their own back. I think that if they don’t, the regulators will probably be just in asking them to do so,” said director James Falla.

He added that it would be a good idea to help the consumer as “interest rates are very confusing”.

According to Credit Action’s latest assessment of personal debt, the total UK personal debt at the end of October 2007 stood at £1,391 billion.

The growth rate increased to 9.7 per cent for the previous 12 months which equates to an increase of £122 billion.

Tags: Credit card, Charles, October, personal debt, growth, cent, loan, loan lenders

Blocked spending on credit cards problematic

Young travellers who take a parent’s credit card with them on their travels are finding it blocked for appearing fraudulent, gapyear.com has said.

Backpackers are often found to be spending abroad while their parents are simultaneously carrying out transactions on a copy of the same card at home which can lead to the provider stopping the card.

Tom Griffiths, founder of the travel website, said: “Because they visit a few countries in a limited amount of time, it looks like fraudulent behaviour.

“And, if they’re away from home, the credit card company tries to contact them but obviously they’re inaccessible, so their cards are being blocked. That’s a big problem at the moment [for] backpackers.”

He added that many parents give their children a credit card for cases of emergency as their “biggest fear” is them finding themselves without “access to cash” while away from home.

Furthermore, he said, there is now a specialised card coming in for backpackers and gap year travellers that is prepaid and allows transactions with no risk of blocking. It also removes the common problem building up “uncontrollable debt”.

According to gapyear.com 230,000 people take a gap year between the ages of 18 and 24, spending an average of £3-4,000.

Tags: credit, Parent, card.tom griffiths, fear, copy, amount, Credit Cards, Credit card

Cashback key to credit card success

Nearly one quarter of credit card users – 7.7 million people – are considering reducing the number of cards that they have and consolidating them into a single card that offers them all the features they require.

In a survey of consumers, Abbey found that cashback is considered the most important feature for a credit card to have.

While 20 per cent said it was vital they could get cashback, 16 per cent said they would only choose a card with a low APR and eight per cent were hunting for a card with a consistently low flat rate.

Another six per cent wanted shopping discounts, while four per cent hoped to find a card that would reward them with free air miles. Only one per cent of the sample was looking for a charity credit card.

“In the current climate, people are becoming more and more savvy about the impact numerous cards have on their credit rating and a significant number of cardholders are now looking to consolidate all their credit cards,” said Roger Lovering, managing director of Santander Cards UK.

“Abbey looks set to benefit from this as cashback is the feature people say they value most.”

According to MoneyExpert.com, a growing number of cards are now offering cashback schemes, but the average rate offered is just 0.72 per cent.

Tags: Technology Internet, card success, cashback, credit rating, low flat rate, Credit card, Tesco Clubcard

Parents forking out for offspring debt

Some 7.5 million parents are having to financially support their adult children, new research has found.

A MoneyExpert survey found that 40 per cent of parents with adult children have to help out with debt problems, with some £2,540 being paid per family on average.

Mobile phone bills and car finance were the most popular debt types that 24 per cent of parents have helped to cover the cost of, closely followed on 23 per cent by credit card bills.

Overdraft finances on 20 per cent and student loan debts on 15 per cent also featured as the fourth and fifth most common types of debt.

MoneyExpert chief executive Sean Gardner commented that the figures reveal that child expenditure is now a financial burden for many parents even when their kids reach adulthood.

“With the cost of living so high at the moment and with so many people living a buy-now-pay-later lifestyle, parents are often forced to help out with their children financially in later life,” he added.

Recent statistics from the debt charity Credit Action reveal that the average graduate debt for adults under the age of 30 is £12,363, but the figure represents both a decrease of £889 on 2006 and the first drop in graduate debt for six years.

Tags: Credit card, Financial services, adult children, graduate debt, adult, Student loan, credit, Parent

Are banks playing on the consumer’s conscience?

Over recent months consumers in the UK have been finding more and more services and products that are going ‘green’, enabling them to get the services or products that they need whilst also helping the environment. Read more

Tags: Payment systems, way, green credit card, bank accounts, consumer, banks, Credit card

New term sees Brits sort out finances

For school children, September and the new school term means a fresh start, but it seems that at this time of year, adults too are following suit and turning over a new leaf.

Research from Lloyds TSB shows that in the autumn, some 56 per cent of adults vow to get fit, 34 per cent vow to spend more time with loved ones and 36 per cent promise to sort out their finances.

Over a quarter (28 per cent) of those who said they wanted to get their financial affairs in order planned to move their current account and over a third (35 per cent) are looking for an account that will offer higher credit interest rate, with changing credit cards and finding more competitive insurance also a priority.

A positive three-fifths think they will stick with their new commitment to better financial management.

Ian Larkin, managing director of consumer banking for Lloyds TSB, said: “Time and again, people tell us that sorting out their finances is a top priority, but many overlook the difference that a competitive current account can make to their finances.”

Some banks, including Lloyds, have staff dedicated to making switching accounts an easy and smooth process, so that new term financial resolutions are painless as well as beneficial.

Tags: competitive insurance, year, banks, Credit card, higher credit, autumn

Lifetime balance transfers

One big advantage that a lifetime balance transfer has over a consolidation loan is that it offers far greater flexibility when it comes to payments, a leading bank said today.

With credit card users paying hundreds of millions of pounds worth of penalties last year, looking to avoid such fees ought to be a big priority among British consumers.

“You know exactly what you are going to pay and it is a guaranteed balance,”
Donald MacLeod, head of credit cards at Sainsbury’s Bank, said.

“[It] is probably one of the most straightforward ways of using a credit card: you transfer the balance [and] you know what you’re going to get,” he added.

“One of the big benefits of the lifetime balance offer compared to loans is that there are no penalties so you’ve got complete flexibility of payment – so as long you give a payment you can pay as much as you want or as little as you want, whereas with a consolidation loan your payments are set in stone from the start.”

Mr MacLeod also said that, far from encouraging debt, the flexibility of payment offered by balance transfers made them a good way of restructuring existing debt.

Tags: head of credit cards, lifetime balance transfers, today, year, Credit card, way

Touch-and-pay Barclaycard launched

Barclaycard’s new OnePulse, an innovative contactless credit card, already has 1,000 shops in London signed up to accept it.

OnePulse is now all set to be launched next month.

The card’s major innovation is that items costing less than £10 will be able to be purchased in participating retail outlets without customers having to type in their PIN.

Guy Harvey, financial director at resteraunteurs Eat – one of OnePulse’s new clients – said that he was “excited” by the scheme.

“It will help us to eliminate some of the frustrations for our customers, such as queues in the busy lunchtime rush.”

The card was inspired by the Oyster card system, launched by Transport for London in 2003. For the first time, the city’s residents could touch in and out by using smartcards, and were no longer forced to buy paper tickets.

Users of OnePulse will also be able to use the new product as an Oyster card, Barclaycard has previously announced.

The BBC reports that Visa and Mastercards will also be introducing touch-and-pay technology in “certain London locations” from next month.

Tags: Credit card, GBP, bbc, scheme, Credit Cards, smartcards, OnePulse

Credit card fraud on the rise, according to Experian

Identity fraud, with thieves taking credit card numbers from victims, is on the increase, financial information provider Experian said today.

Recent research from the company shows a 69 per cent year on year rise in identity fraud between 2004 and 2006.

Experian spokesperson Peter Brooker said that a new generation of fraudsters was taking the theft of credit card numbers as a mere starting point.

“One of things we are seeing is that there is an awful lot of current and previous address fraud”, he said. This occurs when “the fraudsters are actually, not just taking over people’s accounts or using various methods to get hold of people’s credit card numbers, but are actually taking their entire identity”.

Research from KPMG, out today, shows that overall rates of fraud are rising dramatically, valued at a total of £594 million in 107 cases coming to court already this year.

This beats the overall totals for the years 2000-04, combined, with KPMG terming the figures a “step change” in fraud rates.

Tags: theft, Credit card, previous address fraud, overall rates, identity theft, people's accounts, spokesperson

Newcastle council admits credit card mix-up

An administrative error by Newcastle City Council has led to up to 54,000 credit and debit card details being made public for over a year.

The security mishap, finally fixed in April this year, was revealed yesterday, as the council conducted an independent security review into its financial dealings.

Data including card numbers, names and addresses – all gold dust to fraudsters – were revealed, as a file of council transactions with local residents, including council tax, rent and parking fines, was uploaded to an insecure server.

Scant reassurance for local rate payers comes with the information that the file was encrypted, making it more difficult to read.

An exact figure for those exposed will come as the error is more fully investigated by an internal review.

“We very much regret that this situation has developed”, Newcastle council chief executive Ian Stratford said.

“We would stress that there has been no indication of any fraud or loss, and that we spotted this situation through the thoroughness of our own security and checking systems”, he added.

Tags: rate, Credit card, Audit Commission, parking, Scant, financial dealings, names and addresses

Holidaying card holders should keep record of helplines

Credit card helplines provide essential customer protection against fraud, payments association Apacs said yesterday.

This advice especially applies to those intending to use credit cards on holiday this summer, with the trade association recommending that a copy of the helpline numbers always be to hand so that providers can be quickly notified if their card is stolen.

Holidaymakers were also advised to cut down the amount of cards taken with them to a minimum.

A spokesperson for Apacs said: “I think if you’ve got a lot of store cards or five credit cards then you don’t need to take all of them. So minimise your chances of fraud. Look after them. Frighteningly, people don’t.

“Before you go, make a note of the 24-hour helplines of the card companies. So if something does happen, you’re not then searching who to phone; you’ve always got that number with you.”

The spokesperson also noted that increasing numbers of tourists are using their cards in place of traveller’s cheques because of convenience, despite the inherent risk of fraud that comes with their use.

Tags: copy, yesterday, card holders, helpline, Frighteningly, cheque

M&S takes credit card award

Consumer watchdog Which? has handed out a number of prestigious awards, detailing the best products and services that it believes are available on the market.

A ceremony was held at the British Museum to announce the winners, with broadcaster Fiona Bruce hosting the event.

A number of awards were handed out across all sectors and a number of financial firms were recognised for offering excellent value.

The Best Current Account Provider award was presented to Smile, while Marks & Spencer’s M&S Money walked away with the Best Credit Card Provider honour.

Deputy chief executive of M&S Money Eddie Nott expressed his joy at the result.

“We are delighted to win Best Credit Card Provider in the 2007 Which? awards. It is a particular honour to be recognised as the best on offer to British consumers following rigorous research carried out by Which?,” he said.

“The ‘& More’ card launched less than four years ago and now more than three million M&S shoppers are cardholders, making M&S Money a top ten credit card provider.

“As well as offering great products and service, we give our customers ‘a bit more M&S’ with the ‘& More’ loyalty scheme, nought per cent interest on shopping and fee-free balance transfers,” he added.

Which? congratulated all of those who picked up awards this year and called upon those that did not to up their game in the next 12 months.

“For those companies that didn’t get an award this year, we hope today will inspire them to try for the winning spot next year,” said Peter Vicary-Smith, chief executive of Which?.

Tags: fee-free balance transfers, Deputy, Credit card, account provider, Smith, offering, british museum, Best Current Account

Another interest rate rise

Interest rates are the highest they have been since April 2001 after the bank of England announced yet another rise.

The 0.25 per cent increase is the fourth rise since last August and is bad news for borrowers up and down the country.

Many experts had been predicting the Monetary Policy Committee’s (MPC’s) decision and some had even forecast a bigger increase of 0.5 per cent.

The rate rise was brought in to keep inflation in check and recent figures show that inflation is currently at record levels.

People with a mortgage, credit card or loan will be disappointed with the decision and will need to keep an eye on their finances to ensure that they can keep up repayments.

Someone with an £80,000 mortgage can expect to see their monthly payments increase by around £12, while those with a £200,000 mortgage will see payments rise by £30.

Experts are also warning that this is unlikely to be the last interest rate rise, with economists predicting more to come in the months ahead.

Tags: Credit card, Financial services, rate rise, loan, business, mortgage, bigger increase, bank of england

Brits still love cheques

Although they are seemingly becoming a thing of the past, cheques remain extremely popular among Britons.

New research, carried out by Which? magazine, shows that 57 per cent of people over the age of 16 find them “really useful” for carrying out banking.

In addition, cheques are still widely used, with 55 per cent saying that they had used one as a form of payment in the last month.

The findings come as firms such as Boots and Shell are announcing that they plan to phase out the use of cheques.

Although the research may cause these stores to have a bit of a rethink about when to ban cheques, Which? found that they are correct to note that the method of payment is slowly dying out.

Of the 1,003 people survey, 72 per cent said that they use cheques less now than they did five years ago, while almost 25 per cent found it “annoying” to receive one.

Boots will no longer accept cheques in its stores from this month, while Shell has already phased them out at all of its 586 UK forecourts.

Tags: rethink, payment, shows, Brits, shell, Credit card, bit

Store cards forced to admit they’re bad value

Millions of shoppers across the UK will soon be told by their store card provider that they could be getting a better deal elsewhere.

An inquiry by the Competition Commission into the Annual Percentage Rate (APR) charged by store cards carried out last year found that they were too high.

This has led to store cards with an APR above 25 per cent now being told that they must provide a warning to card holders informing them that they could be getting a better rate with another product.

These warnings will have to appear on the card statement and store card providers appear happy to comply.

“Of late, some providers have already moved their rates lower,” revealed a spokesman for the Finance and Leasing Association (FLA), which represents providers.

“Providers are getting on and implementing what the Competition Commission wants. No-one has any issues with incorporating this information on statements.”

During its inquiry, the Competition Commission calculated that the UK’s 11 million store card holders are overcharged by around £55 million every year.

Tags: George Osborne, deal elsewhere.An inquiry, No-one, store, Credit card, Competition Commission, card statement

Banks extend credit card cash advance charges

Customers are being urged to be as savvy as possible when using their credit card, with many providers believed to have extended the remit of cash advances.

Such an action could be tough on consumers, with the interest rate on purchases such as gift vouchers and online betting often being double that of usual cash transactions.

Nick White, director of financial services at price comparison site uSwitch, has described the way in which cardholders are being “bamboozled” by the banks’ tactics.

“They don’t know whether they will be charged at the much higher cash withdrawal rates on a whole raft of credit card transactions unless they scour the small print in their terms and conditions,” he told This is Money.

The measures are believed to have been implemented by many financial providers to recoup finances as a result of an Office of Fair Trading decision last year, which compelled banks to cap penalty fees at £12.

According to the Association for Payment Clearing Services, cash withdrawals on credit cards in the UK totalled £8.22 billion last year.

Tags: Clearing, advance, Financial services, Association, uswitch, Credit card, action, penalty

Debts hitting the young

Debts are hitting the young, with over half of England’s teenagers having experienced debt by the time they are 17, according to a new survey.

The survey, by pfeg (Personal Finance Education Group), found that 90 per cent of teenagers worry about money and spending, and two thirds think about money on a daily basis.

When it comes to overdrafts and credit cards, 90 per cent view them as an easy way to spend more than they earn.

The survey was conducted as part of a schools initiative being mounted by the pfeg in a bid to deliver improved personal finance education to the young.

Wendy van den Hende, chief executive of pfeg, said: “We owe it to our young people to ensure that they have the financial acumen to deal with the responsibilities of being an adult.”

“We firmly believe that incorporating financial education into the existing school curriculum in a way that is relevant to young people’s lives is the best way to help them gain and retain the financial skills they need for the future.”

Consumer debt in the UK has now exceeded £1.25 trillion.

Tags: england, Youth, Wendy van den Hende, Credit card, finance education, group

Credit card market lacks competition

There is a lack of competition in the debit and credit card market, meaning consumers are getting a bad deal.

That is according to a new report published by the European Commission (EC) and it backs claims previously made by the British Retail Consortium (BRC).

For some time now, the BRC has been arguing that there is a lack of competition and that fees charged for transactions are an unjustifiable tax.

The BRC has revealed that the fees we pay are fuelling excess bank profits and figures from the EC report show that credit card issuers are making profits of 40 per cent.

Calls are now coming for the Office of Fair Trading to recognise the findings of the EC report in its current case against Mastercard and Visa’s fee arrangements.

“This report is a welcome indication that the commission agrees with us that banks are abusing their position,” said Kevin Hawkins from the BRC.

“The report sends a clear signal to member states, including the UK, that consumers and retailers have been bearing the costs of that abuse.

“We’ve long argued that high charges are an unjustifiable tax on consumers leading to excessive profits for the banks,” he added.

Customers looking to get a credit card should shop around and try to find the best deal to suit their personal needs.

Tags: tax, Credit card, credit, BRC, kevin hawkins, fee, United Kingdom, MasterCard

Financial habits are written in the stars

The time of year in which you were born may be affecting your payment habits and banking behaviour.

Research carried out by the UK payments association (Apacs) takes a light-hearted look at UK consumers’ payment habits according to their star sign.

The survey, which was completed by 2,000 people, found that Capricorns are the most financially astute, but they are let down when it comes to paying their credit card bills.

Scorpios are said to be the sign of the debit card, with the majority showing a strong preference for using this form of payment. In addition, people of this star sign are particularly financially savvy.

Those who fall under the sign of Libra are said to be uninterested in their finances and often fail to pay attention to detail, as well as being slow to check their statements.

“The guide takes a humorous astrological look at our payment habits. However there is a serious point to be made,” said Sandra Quinn, director of communications at Apacs.

“We all need to be conscious of how we are managing our finances – it pays to make sure you are doing it well and there is no better time than at the start of a new year to review things.

Ms Quinn says everyone should check their statements “promptly and thoroughly”, like Virgos, shred their documents when discarding them, unlike Taureans, and have a different pin number for every card owned, something not done by most Leos.

Tags: Capricorns, Payment systems, card, Libra, payment, Credit card, UK payments association

Helpful hints for Christmas recovery

Consumers are being offered advice on how to overcome the financial difficulties that we all inevitably experience during January.

Which? says there are a few simple steps which can be taken to avoid allowing a debt molehill to turn into a mountain.

One piece of advice is to buy things on a credit card which charges zero per cent on new purchases, but ensure the balance is paid back before standard interest rates kick in.

Which? also says it may be a good idea to transfer debt from one credit card to another, taking advantage of a new interest-free period, but the firm urges caution when moving money in this way.

“Many of us will have overspent over the festive period, or be planning large purchases in the January sales, so it’s a good time to sort out our finances,” said Malcolm Coles, editor at which.co.uk.

“It’s really important to shop around to make sure that you get the best deal on credit.

“For those who already owe money it’s very easy to transfer existing card balances to a credit card with a lower interest rate, but consumers should check the terms and look out for transfer fees to make sure that they know how much it will really cost them,” he added.

Which? also advises consumers that they should only ever secure a loan against their home as a last resort.

Tags: Credit card, finance, firm urges caution, molehill, interest rate

Credit Card Charges

A return to form

Some years ago annual fees on credit cards were common. Today as the credit card companies compete amongst themselves for consumer business with zero percent enticements most annual fees have disappeared. Now, as a result of what the industry regards as lost income through consumer fickleness the threat of annual fees is back.

We’ve looked at a group of cards provided by American Express, some of which incorporate a fee into their benefits package and ask, are the annual fees worth it? And do all lending companies re-coup their “losses” by penalising users who step out of line?

An Alliance

In the Summer of 2005 American Express and British Airways announced they were going to continue the British Airways American Express credit card scheme. They now offer three cards under this heading: the basic card, the British Airways American Express Premium card and the Express Premium Plus card. The Premium Plus card has an annual fee of £120.

This is admittedly very high compared to most annual fees of “lesser” cards. Even others in the Amex group where an annual fee is charged it is either £30 or £60. So, why the difference?

The intention is clear

The picture becomes clear when you look at the figures for total charge for credit and interest on each of their cards.

This figure is arrived at by adding together the interest charged and an annual fee. It’s based on borrowing a sum of £1,500 which is repaid in equal monthly instalments over the period of one year, but does not take into account any separate promotional incentives that may be run on any particular card.

The three basic cards in the American Express range have charges totalling between £123.72 and £152.81. The Premium cards vary from £123.72 to £140.79.

All very similar, when you consider that the cards annual fee varies from £30 to £120! So basically you either pay more in annual fees or you pay more in interest. Either way the company, makes sure on this sum that a user of any of the six cards is going to get charged between £120 – £150 for the pleasure of using the card.

But I hear you say, what about the other benefits to the user? Yes, these cards award 1.5 BA miles in return for every £1 spent on the card. Good value? …. Possibly, If you compare it to the Air Miles credit card which gives only 1 Air Miles point for every £20 spent on that card.

Is it worth It?

The bottom line is that any card such as this one from the American Express and British Airways alliance will be of benefit to the user and worthwhile if the user already purchases what the credit card company is offering. In the case of these cards, the premium cards are aimed at small business use, so a fee of £120 isn’t going to break the bank and small companies whose employees do a lot of air travel are likely to jump at these cards.

What they do illustrate however, is that the credit card companies have carefully calculated the expected returns from each of their products. After all these are financial institutions, unlike most of their consumers they understand how to make money! They are not charities and they have reams of data telling them how much money they can expect to make from each of their products.

Punish the offender

The variable for all credit card companies is the way each user actually uses their card and do they love it when somebody steps out of line and doesn’t pay on time, or goes over their credit limit!

In early 2003, The Office of Fair Trading launched an investigation into the penalty charges levied by credit card companies to establish whether they were in fact “excessive”. Despite findings that indicated the fees of £20 and £25 charged to the consumer were greater than the costs to the lender of such defaults, it appears many credit card companies continue to charge what they like, as quite a few still charge these high rates.

Unenforceable?

Speaking in 2005, barrister Richard Colbey from Lamb Chambers declared that “Credit card penalty charges are legally unenforceable because they seek to punish the borrower rather than compensate the bank for any losses that they have suffered as a result of the unauthorised borrowing”

Perhaps this explains why if you have omitted to pay on time or accidentally exceed your limit the credit card companies are usually willing to repay part of the penalty incurred. But they will never waive them completely.

Tags: Express credit card, american express credit card, Richard Colbey, Credit (finance), Credit card

Credit Building Tactics

Your Credit Rating and you

There are two main credit rating agencies in the UK: Experian and Equifax.

When credit card companies receive an application for a card they will more than likely run the person’s details past one of these two agencies. It’s the job of these agencies and others like them, to keep on file all applications for credit, whether or not you were successful and details of how you conducted your dealings with debtors when you had that credit.

This information includes your mortgage payments, sometimes it includes utility bills and it can even take into account the area in which you live and whether you are on the electoral roll. The lender will compare the data it receives back from the rating agency with its selection criteria to build up a points profile of you as a potential risk. If you don’t score enough points you are considered to be a bad risk or have a low credit rating.

Don’t Panic

If you are turned down by a lender it’s possible to find out what your credit rating is by writing to the agency enclosing payment for £2.00 and asking to see a copy of your file. Or apply online at one of the numerous websites offering the service.

If you do have a low rating, don’t panic! You can improve it. Here’s how.

Start slowly

By initially getting a credit card designed of people with a poor credit rating you can start to make regular payments into it. These payments should be fairly large and the best thing is to pay them off in full each month.

If you can and you feel like playing the credit ratings agencies at the top of the game, then you can go one stage further. Sometimes loan companies will refuse you credit if it appears from your history that they won’t be able to make money out of you. So for the hell of it you might want to leave a bit in the card for them to nibble at with their interest charges. But whatever you do, don’t leave too much in there as the APR could be soon become crippling.

And remember, you don’t need to do this every month – clear the balance more often than you leave a little for them. What you are doing is demonstrating that you can look after your finances by working the credit card.

Careful does it

The above method should really be called the kamikaze school of credit improvement and it’s not guaranteed to make a difference with all lenders. It requires you to be very self disciplined and if you’re the sort of person that might get carried away with spending or be just too lazy to control your repayments you probably shouldn’t go near this approach.

The building blocks of credit

Instead you could start to build up your credit rating by co-signing with a family member or a good friend on a small loan or credit card. But be aware of

the potential pitfalls of signing up to a joint debt if you fall out with your

co-signee! This is a good building block for young people who are starting out on their journey into credit.

It’s all over

Once it’s all over and your credit rating improves you will quickly get another card. When it arrives, play the game the usual way and give the credit card companies as little as possible!

Whatever you do don’t forget to meet your monthly repayments on any bills you have or your rating will go sliding again. If you do find you’ve forgotten a repayment, contact the company, get them to make a note that you have contacted them and pay it as soon as possible.

If you move house, tell all financial institutions you are involved with and make sure you register on the electoral roll of the new area.

Applications

Every time you make an enquiry about credit it’s recorded on your rating file. So if you are turned down by a company it will be shown. For this reason it is a good idea to avoid making several applications to different companies if you are turned down by one. Given that it only costs around £2 to find out how your rating stands it would be better to get a copy of your rating from the agency before filling in more applications.

Alternatively simply phone the company before applying and ask them if you fit the credit profile they will want; are you the sort of person they will accept? A quick conversation could do you and your credit history a world of good.

Buying time

A little patience is needed before your credit rating gets going, but while you’re waiting for things to start moving you can help them along by getting a few scorecards, but always pay off the balance on a regular basis as these are usually the most expensive type of credit facilities out there. So don’t go grabbing scorecards for things that you don’t already buy, or you’ll end up in a financial nightmare of spiralling debt.

And finally…

Whatever you do, when you get the credit card that you really want, don’t go over your credit limit. You’ll be charged an outrageous sum for the privilege and you guessed it, it will go on your credit rating file.

Be safe, follow good practice and get rid of all those scorecards and close down your original credit account at least until you have got used to handling credit again or if it’s for the first time until you can recognise how you might respond to the temptation of the card!

More Information:

• Credit Card Advice – CreditCards121 advice section
• Credit Reports
  Every time a customer applies for a financial product such as a credit card, the credit company will consult that customer’s credit file. This file records all their financial activity in terms of credit applications and banking activity.
• CCCS – Free non profit association advice
• APACS information page

Tags: business, original credit account, money, agency enclosing payment, t score, Credit card

Credit Card Balance Transfer Guide

A frequent mistake by many credit card holders is to run up a balance, which for one reason or another simply can’t be paid back in one go, so it starts incurring interest. And those interest payments can be crippling.

It’s no wonder the British public have been playing ‘hot potato’ with their credit cards; swapping balances here, there and everywhere. But this has its advantages and disadvantages.

Here’s a short guide to balance transfers.

Running up that bill

It’s very easy to run up a balance that sits like a lead weight on the statement every month. As soon as it’s there even the smallest change in interest rate could make quite a difference to your monthly outgoings.

So shop around!

Be brave, be bolshy!

If you have a fairly large balance and you’re feeling brave, it’s worth phoning the credit card company. When you get through, instead of dealing with the person at the call centre, ask to speak to somebody in the department who sets the interest rates.

All these companies are interested in getting your business and somebody, somewhere sets the rates they offer. Play one company off against another. Tell them what other companies have offered you and ask the question: can you go lower?

The chances are they probably will.

Choosing a credit card

Given that you are going to be getting your new credit card account with an opening balance on it you should probably go for the one offering the cheapest APR. That is not necessarily the one offering zero percent incentive for a few months. You need to be aware of what the APR will revert to when the offer period ends. If you decide to change to another credit card company at that time you may get a transfer fee levied at you and it can affect your credit rating if you change credit cards a lot.

It’s certainly not worth going with a credit card that charges you an annual fee – Why pay them twice! There are plenty of cards that don’t charge out there.

New doesn’t always mean better

Remember the golden rule, when you get that new card, don’t use it for anything else.

The chances are that if you do use it then on your next statement you will get two sets of interest and that second interest figure will be at a much higher rate than for the balance transfer. You’ve no excuse for being surprised, as it will all have been itemised in the small print of the terms and conditions…

Money down the drain

So as you pay your monthly fee into the account it will be deducted from the part of the account that is paying the least interest, not from the transaction that was incurred most recently. In which case, all your hard work researching and selecting the card in the first instance would have been wasted by a single slip up.

If you think you might be tempted like this, the answer is to leave your new card in a drawer where it’s out of harms way!

Credit, credit, credit: your rating

Frequently swapping your balance around from one credit card company to another can sometimes adversely affect your credit rating. Your credit rating is the information the lender companies use to decide how much credit they are going to give you.

The one who cannot be named

If every time you change cards you regularly clear the balance within the interest free period then the lending companies will start to see the game you are playing and can refuse to give you credit.

This is then reflected on your credit rating which means that other companies are even less likely to loan you money. From that point on it can be a downward spiral into credit rating hell.

Refuse me?!

In the UK there are two major credit checking companies that lenders use to check your credit worthiness. These are Experian and Equifax. Both these companies hold your credit history and you are entitled to see that information.

Stand and deliver

If you are refused a credit card it will be worth contacting the lender within twenty eight days of being refused to find out which of the two above agencies were used to provide your credit history.

Remember that you will have been refused credit by the company you approached for the credit card, not by Experian or Equifax; however, talking to them will allow you to see what’s on your record and then get an idea of why you were refused credit. In some circumstances you might even be able to reverse the decision.

Get out while you’re ahead

Assuming you did get the credit card you wanted and you have been given a good long introductory offer with low interest on the outstanding balance, how do you make the most of it?

The answer is simply to keep a record somewhere of when the offer expires. If you keep a diary, scribble it in there, or in your palm pilot, or in your desktop organiser – it doesn’t matter where, just keep a note somewhere obvious.

Have we been here before?

With the end of the introductory period written down you can then make an informed choice of whether to transfer to another card or not. With your new-found understanding of the credit rating system you could get hold of your credit rating and base you decision whether to move or not on that.

Whatever your decision your main aim should always be to prevent your credit card bill becoming overwhelming by accruing huge amounts of compound interest each month.

Tags: Credit score, equifax, balance transfer, Credit card, conditions… money

Debt Consolidation Loans – What Are They?

Debt is an interesting thing, it quite often creeps up on you before you realise what’s happening and then it drags you under, gripping hold of you like a drowning person and under you go before you’ve had a chance to catch your breathe. Read more

Tags: income, Credit card, consolidate debts, advertising, debt consolidation, payment protection insurance, debt consolidation loans

Insurance : Do You Care More About Your Pet Than Yourself?

Latest figures from the UK’s insurance industry show that over half of the nation has no life insurance cover. Only 1 in 5 of us has any accident insurance. And less than 1 in 10 of us will take out any type of income protection insurance. By themselves these figures should be a little concerning, but when you add the fact that 1 in 4 of us in the UK has some form of pet insurance, you start to wonder whether or not our world-wide fame for being a nation of animal lovers may have gone a little too far! Read more

Tags: protection, bonus, worth, pet insurance, prudent financial management