It can take 28 years to pay off your credit card

 Credit Cards  No Responses »
Oct 062011
 

It certainly makes sense to pay down your debts if you are in a position to do so. Recent research has revealed that should consumers with a credit card balance of £2,000, who repay just the bare minimum amount each month, 22 years to clear the balance of just £2,000 – paying an extra £2,275 in interest in doing so.

credit cards

It would take 28 years and three months to repay a £5,000 card debt repaying the minimum each month. You would pay £5,912 in interest.

A balance transfer war has broken out and some card providers allow people to transfer existing debts and pay 0pc for up to 22 months, subject to a small handling fee. Once this period is up you need to repay the debt or transfer it again – otherwise you risk paying a high interest rate.

Personal loans are also a good method for debt consolidation as they offer a structured repayment plan. With this option, borrowers know exactly what they will have to repay each month and when they will be debt free – assuming they do not take out further borrowing.

If a borrower with a £2,000 debt makes monthly repayments of £50 it will still take in four year and 11 months to pay down the debt, at an interest cost of £939.

Since the start of the year the personal loan market has been highly competitive, particularly on the £7,500 to £15,000 tier. The increased competitiveness has seen rates on some tiers tumble back to the levels saw before the credit crisis.

 Posted by admin at 4:21 pm  Tagged with: ,

Types of Credit Cards

 Credit Cards  No Responses »
Mar 092011
 

Standard Credit Cards

Standard Credit Cards are offered by Banks and Building Societies as part of their range of services.  The Standard Credit Card offers a basic credit card package, with no ‘extra benefits’.  The Standard Credit Card provides primary credit card services, allowing you to purchase goods and services, obtain cash advances and make balance transfers.

A standard credit card is often the first credit card you are able to obtain. This is because you may not have a credit history and are therefore rarely offer the best credit card deal.

Standard Credit Cards offer Introductory offers, such as a zero percent interest rate on balance transfers and purchases for a limited period are frequently offered to attract new customers. Most cards will allow customers an interest free period of around 56 days, as long as you pay your previous and current month’s balance in full and on time. The application criteria for standard credit cards are not usually so stringent, and the card may be offered to anybody who is above the age of 18.

The Affinity or Ethical Credit Card

The Affinity or Ethical Credit Card is a type of credit card which enables you to support a particular cause or organisation by donating a small portion of what you spend on your card at no extra cost to you. There are a wide variety of causes and organisations which offer affinity cards, and many customers are happy to know that others are benefiting from their spending. What may seem like tiny donations to you add up to huge amounts of extra income for the affiliated organisation. Millions of pounds have been donated to UK organisations from affinity cards within the past decade.

Affinity cards frequently offer good introductory interest rates, but their typical APR (Annual Percentage Rate) will be higher than that of a standard credit card; these cards are therefore best suited to customers who pay off their outstanding balance each month. American Express have a “RED” card where 1% of what you spend will be donated to combating AIDS. For more information, try: .

Cashback Credit Cards

Cashback Credit Cards are popular reward cards.  Cashback credit cards are popular reward cards. When you make a purchase on your credit card, you receive a small amount (typically one or two percent) of the payment back at the end of the year. If you spend a lot of money on your credit card, even a small percentage is worthwhile and could add up to hundreds of pounds cash back at the end of the year. Cash advances and balance transfers do not usually earn cashback rewards, and so you should avoid making these types of transactions on a cashback reward card.

 Posted by admin at 1:58 pm  Tagged with:

How to switch credit cards

 Credit Cards  No Responses »
Mar 092011
 

 How to switch credit cards

The best way to avoid paying interest on your credit cards is to seek the to use Balance Transfer offers, which offer interest free balance transfer offers.

  • The first step is to choose the credit card that’s suitable for you.  Once you’ve done this..you need to click through to the credit card company’s website to fill out the application form.
  • If your application for this credit card application is approved, you will receive your credit card through the post to the address you have given, followed by your personal identification number (PIN) and any additional credit card documentation such as terms and conditions. You should sign the back of your new credit card immediately and call the number on the front of the credit card to activate it.
  • If you are looking to transfer a balance from another credit card you are likely to have ticked a box on the application form letting the new credit card provider know this. Contact your new credit card provider with the details of the credit card or cards you wish to transfer balances from and the amounts you wish to transfer and they will set these up for you. Be warned that you should not try to transfer credit card balances yourself as this is likely to result in paying a much higher interest rate.
  • Keep track of your old credit cards. They won’t automatically be closed when you transfer a balance to your new credit card, so if you’re not going to use them again, it’s best to close the account and destroy the old credit card. You may also wish to set up a direct debit from your bank account to avoid missing any repayments on your new credit card as this may harm your
  • If you make any regular payments from your old credit card, remember to contact the companies you pay and give them your new credit card number and details

 

 Posted by admin at 12:51 pm  Tagged with: ,

Credit Card Interest Rates Explained

 Credit Cards, Investments  No Responses »
Mar 092011
 

Interest Rates Explained

You often hear the term APR explained – but what does it mean?  How much interest are you paying on your credit card….and how can you minimise this ?

APR

APR is the ‘Annual Percentage Rate’. Credit card companies charge you interest every month on the balance of your credit card account.  If you multiply the percentage they charge you every month then you get an amount (APR) that you are paying each year.

What interest am I paying each month?

The interest charge varies from one credit card company to the next but generally falls between 0.8% and 2% per month (this is an APR of 9.6% – 24%).

Example: You have a balance of £1000 at the beginning of the month, and make no purchases etc. Charges for that month will range between £8 and £20.

These figures are different from your minimum payment – which will take into account the interest + paying off a small amount of the total sum owed.

Other Interest Rate info

Interest rates are different for different uses of your card. If you use your card to buy something you will be charged a certain rate of interest. If you withdraw money from a cash machine using your credit card you will get charged a different (usually higher) rate of interest.

You will always have to pay interest on cash withdrawals and other money transfers. See below to find out how to avoid paying interest on your purchases.

 

How can I keep my interest payments down?

a) Pay your outstanding balance by the due date (max 52-56 days after the purchase, minimum 21-25 days)
b) Try to avoid making cash withdrawals and doing other money transfers with your credit card.
c) Take advantage of interest free balance transfers on credit cards and move your debt around.

If you regularly pay your whole outstanding balance by the due date you will not get charged any interest on any purchases. Some credit card companies say “up to 56 days interest free”. What they mean is that if you buy something on the first day of the new period then you have that whole month, plus 25 days to pay it off to take advantage of the no interest offer.

Cash withdrawals using credit cards are expensive! Interest rates are higher on these withdrawals are higher and there is no way of getting round them. Added to that, credit card companies levy a charge for a cash withdrawal (ranging from 1.5% – 3%). Try to avoid getting cash out!

The best way of getting round interest charges!! Moving your money round and use Balance Transfer offers.

Most of the credit card providers have interest free balance transfer offers – use them wisely! If you have £2000 outstanding on a credit card, find another one that gives you 5-6 months interest free on balance transfers and move your debt. On £2000 this could save you between £96 and £240. And it is totally legal!

 

 Posted by admin at 12:38 pm  Tagged with: ,

Credit cards Pro’s and Cons

 Credit Cards  No Responses »
Mar 032011
 
Before you think of having a Credit Card is is useful to look at their Pro’s and Cons
Pro’s
  • Free, short-term credit – as long as you always pay your balance in full by the due date shown on your statement.
  • Credit cards offer a safe and convenient way to pay for goods and services both in the UK and abroad, particularly if you are purchasing over the internet, phone or by mail order.
  • If you pay for something with a credit card, valued between £100 and £30,000, that turns out to be faulty or which you do not receive because the company goes bust, you can claim a refund from the card provider.
  • If you are the innocent victim of fraud you will not be expected to pay if a criminal uses your card, so Credit Cards offer you Protection against fraud.
  • Incentives for using a card such as loyalty points and cash back, or payments to support a charity.
  • Credit cards are accepted in virtually every country around the world and this cuts down the costs of changing your cash to other currencies and also is more convenient abroad

Cons

  • You incur interest if you are unable to repay your balance in full every month. Interest rates vary significantly so if you can’t afford to clear your debt you should look for a card that offers a competitive rate of interest.
  • The amount you can spend on a credit card is capped so you may not have access to as much money as you expected. Limits of between £300 and £500 are common for those who have never had access to credit before, while those with a good history who have shown that they use cards responsibly are likely to be offered a higher credit limit. That said, because of the credit crunch and rising levels of bad debt, providers are now more cautious about the amount they will lend. So even if you have a good track record with managing credit, you may be offered a significantly lower limit if you apply for a new card.
  • Most, credit cards will charge you if you miss the monthly deadline set for your payment.  The easiest way to avoid these penalties is to set  a Direct Debit from your current account
  • You will also be charged if you go over your credit limit.  So make sure you manage your Credit Card to ensure you don’t pay unnecessary interest.
 Posted by admin at 11:59 am  Tagged with: ,

Credit Card Fraud

 Credit Cards  No Responses »
Jul 262009
 

Credit Card FraudI had a worrying episode the other week when I lost my card but thankfully it turned up safe and well.  It got me thinking that even if you take every precaution to prevent your credit card from being stolen or misused, it can still happen.

Below is a list of steps that you can take in order to make the after event a little less painful.

  • Always keep a copy of you card’s emergency phone number so you can contact your card issuer as soon as you are aware that the card has been stolen or misused. Furthermore, keep the number separate from your card as you do not want the phone number to be stolen with the card!
  • Report any card theft to the police immediately. This can be inconvenient and time consuming, but it will simplify the process of getting the card issuer to refund any unauthorised use of the card.
  • If you are travelling abroad, make yourself aware of the card issuer’s procedures for dealing with stranded tourists. For example, Barclaycard will arrange emergency cash advances or replacement cards. 

The maximum liability on credit cards is usually £50 for fraudulent transaction made before the issuer is notified. Your liability is not limited if you have been grossly negligent, such as writing your PIN on the card, or if you have played a part in the fraud. Preventing your card from being stolen or misused is clearly preferable to the hassle and upset involved in dealing with your card being stolen or misused. Below is a list of measures that you can take in order
to help prevent your cards from being used fraudulently:

  • Keep an eye on your card when using it in a shop or restaurant, especially overseas. If an embossing machine has been used, ask for carbon copies and destroy them.
  • Never discard transaction slips which display the card number.
  • Never leave your card where the detail can be copied by a fraudster.
  • Check your transaction slips at the time of purchase, raising any discrepancies with the retailer.
  • Never write your card PIN number down or disclose it to anyone.
  • Ask the retailer to confirm the amount being debited from your card, including any delivery and booking fees, when using your card to pay for an order.
  • Check your credit card statement against the transaction slips you have accumulated through the month. If the transaction was not electronic, it is possible for mistakes to be made when your card is debited, such as transposing two digits.
  • Do not buy products and services from websites that do not use a secure serve to process credit card payments. A secured server is indicated by a small icon of a closed padlock begin displayed at the bottom of your browser.
  •  Never offer your card details to ‘cold’ telephone callers, i.e. anyone contacting you out of blue, even if they claim to be from a reputable company.
 Posted by admin at 5:42 pm  Tagged with: , ,
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