What are Low Interest Credit Cards?

One bit of advice you’ll often get when you’re thinking of applying for a credit card is to look for one with a low rate of interest, or a low APR. It used to be traditional wisdom that your best option in a credit card was always the one with the lowest interest – but not anymore. It also used to be an accepted maxim that you couldn’t get both low interest and great rewards in the same credit card – but that’s changing as well. How do you judge the lowest interest credit card?

Credit cards are notorious for their high interest rates. Typically, credit card interest rates run about ten percentage points higher than secured or personal loans. Plastic offers the convenience of what’s called revolving credit – you can continue borrowing against your credit account as long as you keep it under the stated credit limit and make regular payments on your account. You pay for the convenience of not having to reapply for a loan every time you use your credit card by paying higher interest on it than you would for a one off loan.

As credit card use has increased and the range of available cards has kept pace, the law of supply and demand comes into play. According to recent surveys by the FSA, there are currently enough active credit cards in circulation for every single adult in the UK to have four cards in his or her wallet. With the market for credit cards reaching saturation point, the companies that issue them have had to get more creative in marketing their products. That’s meant interest rates coming down – the typical APR on a standard credit card these days is about 12%, down from 15+% just a few years ago.

That’s just the start of the good news for users of credit cards, though. More importantly, issuers of cards have devised various schemes aimed at the way people use their credit cards in an effort to increase their use. Depending on exactly what your needs are, you can find credit cards with typical APRs of below 10% – and that’s AFTER an introductory period at 1-5% APR on new purchases and balance transfers.

If you’re shopping for a new or first credit card, there are a few things you should know about interest rates and APRs.

1. The higher your credit score, the lower APR you’ll qualify for. The credit cards with the lowest APRs are usually reserved for those with good to excellent credit. If your credit is a bit rum, then you’ll likely be offered a credit card with a lower credit limit or a higher rate of interest – or both.

2. Introductory rates are just that – introductory. Be sure to read all credit card offers carefully to find out just how long the introductory period lasts, and what conditions you have to meet in order to keep the introductory rate intact.

3. A low interest credit card can flip into one with an outrageously high rate of interest if you’re not careful. Late payments often carry not only a one time penalty charge, but also a rise in interest rate that’s permanent. Even worse, if you’re late with a payment on one credit card, the interest rates on your OTHER credit cards may also rise.

4. Knowing your credit rating can help you apply for appropriate cards. When you compare credit cards at comparison sites, you can see at a glance whether the card issuer is aiming for those with excellent credit, or those with no credit or poor credit.

5. Don’t apply based just on a low APR. Be sure to compare credit cards on all fronts, not just interest rates. Check application fees, annual membership fees, processing fees, late fees, balance transfer fees – the whole ball of wax. And remember that these days, there ARE low interest credit cards that offer great rewards. Balance all the information you can find to decide which is the best credit card for your wallet.

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Why The Uk Has The Highest Credit Card Interest Rates In Over A Century

In early 2010 credit card interest rates in the UK increased to the highest figure they’d been in twelve years.

The ‘credit crunch’ seemed to have eliminated any competitive offers in the borrowing market as providers were required to raise their credit cards’ percentage of interest.

It was suspected that this new approach has been adopted as providers become ever more worried about the current lull in employment levels. Higher interest rates will result in existing customers to more quickly pay off their debts and will also somewhat save the providers financially.

In the 1990s, credit cards were relatively new and interest rates as a result were relatively high. In 1998 the average rate was 21.1% and the bank rate was 7.25%. Since then, however, interest levels have declined and borrowing has reached a new popularity. Providers had to offer lower rates to compete with other businesses. In 2006, the average rate was at the lowest recorded percentage: just 14.8%.

The recession has meant a steady climb in rates since 2006, however, even though the bank rate has continued to decrease. The base rate is now at an all-time low: just 0.5% since last March. The average interest rate is now 18.8%, which approaches the recorded amount for 1998. Some other rates have also been increasing, with balance transfer, cash withdrawal and foreign currency transfer often being grouped. This means a larger overall fee across the field of credit card payment.

The Bank of England stated recently that the amount of ‘bad debt’ being written off credit cards has vastly increased. Banks accept that a customer’s debt will never be repaid and will subsequently write it off.

With unemployment rates reaching a new high, banks have to accept the ’striking off’ of outstanding debt as a regular occurrence.

£1.6bn of debt was written-off in the third quarter of 2009 which is double the humble £8bn of 2008. It is mainly this high level of bankruptcy that has coerced providers to increase their rates once again.

The confirmation of this 18.8% rise is obvious across the financial world. The Barclaycard Simplicity credit card as well as MBNA’s platinum and platinum rewards credit cards upped their interest by 1%, making a total of 16.9% and 7.8% respectively. The trend has also held true for instant decision credit card interest rates.

There are a few cards that have decreased their interest, however, Saga’s platinum card for example which decreased its interest by 4%.

The change will have a widespread influence, as even existing borrowers who never miss their payments will suffer from the increase. Transferring debt is also becoming very difficult with balance transfer and low introductory rate offers increasingly hard to find.

Even the existing lower interest offers will be very wary about the applications they accept. Even though the increased rates will not affect those who pay off their charges in full every month, more disorganised borrowers could receive a rather startling wake-up call.

Big Business Leads the Drive for Lower Credit Card Fees

Big Business Leads the Drive for Lower Credit Card Fees

There are a lot of mixed messages floating around about credit cards. We know that they’re a vital part of building and improving credit, but it’s hard to tell exactly what you’re paying in monthly fees and late penalties. It seems so complicated! Fortunately, credit card companies are beginning to lift the veil of secrecy so that it’s easier than ever to see exactly what you’re paying and when.

Why the Change of Heart?

Thanks are due to two unlikely sources: Wall Street and retailers. MasterCard just became a publicly traded stock in May, and Visa is going to follow suit next year. This is great for cardholders everywhere, because Wall Street bigwigs want to see the raw data before they invest money in a company. There have long been rumors that credit card companies work together to gouge consumers with excessive fees. No investor would want to put money into a company that could go the way of Enron. Lawsuits, scandals, and shifty business all add up to lost money for the stockholders, so in order to make their stocks attractive to investors, credit card companies are bending over backwards to show that they are on the up-and-up. This doesn’t only help Wall Street investors, it helps all cardholders see exactly how much they are paying and when they are paying it.

The other group that is responsible for this increased disclosure is the merchants who take credit cards. If a cardholder is unhappy with his service, he can always switch to another plan, or even another provider. However, retailers who choose not to take credit cards end up losing business to competitors who will. They’ve decided not to take it anymore, and who can blame them? Merchants typically pay one or two percent of each purchase to the card companies. There are about eighty types of fees that merchants have to pay, depending on how a card is swiped, whether they take a signature, how often each card is used, and much more. Now that retailers are learning how much they are being charged, they can put pressure on the card companies to give them better deals – and a better deal for them means a better deal for you!

The Benefits For the Cardholder

So it’s easy to see why investors and retailers want to see the details of credit card companies’ fees. But how does it help the average person with a Visa or Mastercard in their wallet? The first way is that comparison shopping is now easier than ever. In the past, most people based their decisions on interest rate alone. However, that card with the lower rate could be sticking you with excessive late fees, or even raising your rate each time you’re late – without even informing you!

As cardholders become more informed and comparison shop for the best deal, companies will undoubtedly lower their fees and rates, especially those tricky “hidden” ones. The competition will encourage the card companies to try to win business, rather than just taking it for granted. Having a credit card is vital in today’s society, but it’s been a daunting prospect for some consumers. Soon there will be no excuse for living without a credit card, and we’ll have “Big Business” to thank it!

Stay safe.

Sincerely,

James

http://www.CC-Yes.com

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Credit cards ‘are a handy way to make purchases’

When used properly, credit cards can prove to be an extremely effective spending tool, it has been suggested.

The numerous benefits of using a credit card have been highlighted by one writer.

Stating such products are “a very handy piece of plastic”, Rachel Robson points out the wide-ranging benefits attached to credit cards. And they can be particularly effective, she reveals in a lovemoney.com article, for those looking to fund major expenses.

Indeed, should people have an event such as a birthday or holiday coming up and they already know they will be unable to meet such costs straightaway, a 0% purchases credit card could be “a sensible way to pay”. By funding expenditure this way, consumers will find they benefit from an interest-free period “giving you plenty of time to pay off the debt”.

And those looking to compare accounts in order to get the best deal possible may be interested to hear her points that the Halifax All in One Credit Card offers 0% purchases for a nine-month period, while the Tesco Clubcard Credit Card does not charge interest on purchases for a year.

A cashback credit card could also be advisable for those who pay for day-to-day goods and services on their plastic but manage to pay off what they owe at the end of each month. Indeed, by using such a credit card Ms Robson points out that borrowers can earn back a percentage of what they spend, with the American Express Platinum Cashback Card an especially effective product for this. However, those who are unable to clear off their balance each month were reminded they will face a “hefty interest rate”.

Meanwhile, people who they have amassed significant debts may wish to consider shifting money owed on existing cards to a 0% balance transfer credit card. And as seeking out 0% credit card deals means consumers will not be charged any interest on money owed, she states borrowers will have the opportunity to make headway into clearing their debts.

The benefits of taking advantage of 0% balance transfers were recently highlighted by Neil Faulkner in an earlier lovemoney.com piece who claimed such credit cards are “an extremely cheap way to borrow”.

Consumers ‘booking their holidays late’

While some people like to book foreign excursions such as river Nile cruises early on to provide them with peace of mind and something to look forward to, many may be leaving the arrangements until the last minute.

According to research conducted by Sainsbury’s Finance, around 1.28 million of those going on Nile river cruises and other such vacations this summer left booking until the last minute.

The organisation discovered that 818,000 individuals delayed confirming the details of their trips until a week or less before they jetted off.

This may have saved them considerable amounts of money, the organisation claimed.

Meanwhile, 290,000 travelled to their resorts just 48 hours or less after making their bookings, Sainsbury’s noted.

Many consumers may be looking to get the best possible deals at present given the ongoing economic difficulties facing the economy.

Sainsbury’s also found that in order to cover the cost of holidays like river Nile cruises a considerable number of people polled noted they spread the payments over a number of months.

Of those who use their credit cards to fund Nile river cruises and other trips, only 58 per cent pay off the spending within a month.

They average length of time to clear the debt was said to be around two-and-a-half months.

Meanwhile, 13 per cent take between five and 12 months to clear it.

Offering advice to consumers, head of Sainsbury’s Credit Cards Stuart McKeggie said: “Credit cards can be a great way of spreading the cost of your holiday, or for any other large purchase.

“However, if you don’t think you will be able to clear this within a month, you should consider taking out a new credit card that offers an attractive interest-free period on purchases.  You can then budget to ensure that you clear your expenditure during this period.”

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Lost in the supermarket? Apparently not, as a significant number of Britons are actually doing the opposite of the famous Clash song and are spending less time – and money – in the grocery aisles, new research has shown.
In a study carried out by the Co-operative Bank, it was revealed that as declines in the financial market continue to make its presence felt on consumers’ pockets they are accordingly adjusting how much cash they splash. As such it was indicated that people are now looking to make sure they spend less money when shopping for food, with the typical visit to a supermarket now said to cost 68 pounds and 33 pence. Such a figure represents a fall from the average expenditure of 89 pounds and 88 pence which was splashed out in 2007. Overall, it was stated that some 755 pounds and 56 pence less is being spent over the course of a year at the likes of Tesco, Sainsbury’s, Asda and other retailers.
And as the credit crunch continues to make its presence felt by reducing shoppers’ expenditure on groceries it may be possible that consumers find that their ability to keep up with other areas of financial demand – such as personal loans, credit cards, utility bills and mortgage repayments – is improved.
The study also revealed that about half of those questioned claim to have cut down the number of food shopping trips they make. Such consumers are now said to favour purchasing all their groceries for the week in one go, rather than making several smaller trips to a supermarket. Meanwhile, more than a third (38 per cent) of respondents reported that their families have noticed the cutbacks which they have made in their weekly shop.
Emma Thomas, current account product manager at the Co-operative Bank, said: “People are being more conservative in their spending and are finding that cutting back on luxury items can help make a difference. Developing a household budget is essential to keep spending in check and to identify ways costs can be trimmed, while keeping in touch regularly with their bank account will help people to know exactly what they have to spend.”
Research from the financial services firm showed that flowers and magazines are the two items Britons are buying less often at supermarkets. CDs, “posh” handwash and bottled water rounded out the top five areas which are being cut back upon. The other items which consumers are said to be sacrificing on include wine, teeth whitening products, fabric conditioner, unsliced bread and nail polish.
For those wanting an effective way in which to get to grips with managing the cost of groceries and other household expenses taking out a debt consolidation loan may be advisable. By taking out this kind of loan, borrowers could find that they are able to merge various areas of monetary constraint into a single low-cost monthly repayment. Meanwhile, a recent study by Halifax Home Insurance revealed that as the cost of living has risen an increasing number of people are choosing to stay in with a DVD, a board game and a takeaway instead of going for a night on the town in a bid to cut down on spending.

With the latest round of energy hikes are released, people are rushing to get themselves themselves on fixed-price tariffs to dampen the effect of the savage cost rises, according to the Fair Investment Company.
The price comparison site warned that with additional price hikes predicted as the end of summer approaces, it is vital to get on a fixed-price product as rapidly as possible. It pointed out that whilst such tariffs are becoming more expensive, it might still be worth signing on to high-end rates as the large energy suppliers prime people for a further round of price rises. According to the group, the rate of energy price inflation has been so rapid that Ofgem and a governmental select committee have launched a joint investigation into whether or not the ‘big six’ providers have been collaborating to keep prices at unnecessarily high levels.
However, the Treasury is also considering plans to exercise a windfall tax on energy providers as reports of record-breaking profits continue to leak into the public domain. The Fair Investment Company pointed out that the last time such a levy was imposed was in 1997, when the funds extracted were used to offer support to hard-up people failing to keep their houses warm over winter.
Indeed, Sainsbury’s Bank identifies that for many people, the cost of grabbing a summer deal will have to be paid for using credit as the rising price of fuel, food and energy have an impact. The company predicted that 42 per cent of all expenditure carried out in the coming months will be put on credit cards. Such a percentage would amount to about 3.29 billion pounds worth of purchases made using plastic.
For those who are facing a winter stuck on an expensive tariff, applying for one of the many cheap loans available might turn out a practical course of action. In going for this kind of loan, holidaymakers may discover they may well be able to pay off outstanding debts easily and switch to a provider offering a fixed-price product. Additionally, leftover cash provided by such a loan could be put to good use investing in energy saving appliances and home improvements with the intention of reducing dependence on energy as the winter months draw nearer.
Talking about the decision facing the Treasury, Steve Wagner, leading energy spokesperson for the company, said: “I agree with the government that something needs to be done. The recent increases are going to start hitting households just in time for the winter months and with millions of people already in fuel poverty this is only set to get worse. On Wednesday British Gas raised their tariffs for the second time in six months, putting their gas prices up by 35 per cent and electricity by nine per cent, making them the most expensive energy tariff on the market. We expect the other big energy providers to follow suit and raise their prices too.”
As such, he urged consumers to cap their tariffs as soon as possible.
EDF was the first supplier to announce that it would be raising prices again, with 22 per cent and 17 per cent increases tagged on to their gas and electricity tariffs respectively.
As well as addressing concerns about soaring energy prices, a recently released independent study has additionally known as upon Whitehall to add to the level of protection it provides to homeowners living in flood risk areas. Sir Michael Pitt, who led the review, strongly recommended the government to implement a range of steps to limit risk exposure. There was concern that a large number of would be left unable to obtain insurance, meaning that they may well have to resort to savings or personal loans in order to fund the cost of repairs.

UK credit card legislation requires card issuers to use positive payment hierarchy for customer’s payments by 4th January 2011. It’s believed that the change to positive payment hierarchy helps consumers to save millions of pounds each year.

Virgin Money is one of the credit cards issuers that have run the fairer system of using positive payment hierarchy prior to the legislation deadline.

Credit Card Rates and Offers

Credit Card Rates and Offers

Credit card rates will vary with the company offering the credit card as well as with the credit rating of the cardholder. While someone with an excellent credit rating may pay a very low rate on a particular credit card, a person with only good credit pay a higher rate. The rate is determined by a set table, which reflects the risk credit card company feels they are taking.

Offers by credit card companies may be permanent features such as frequent flyer miles or cash back or they may be temporary low or no interest rates on balance transfers or new purchases. However, offers, which have a time limit on them, may leave the cardholder paying a significantly higher rate of interest after the introductory period expires.

A cardholder must first assess their spending habits because sometimes they may save money with a credit card with a higher rate. This might seem a contradiction, but take the person who never carries a balance, who always pays their credit card in full every month. They have no real use for a lower rate but may choose one in case of emergency. However, if they also spend over ,000 a year on their card, it could be that they may benefit more from cash back card or a card with special offers.

A person who carries a balance may want to consider a low interest rate credit card. The low interest cards often have an annual fee but it can be a real savings in terms of the interest rates.

Persons with larger balances they are anxious to pay off might be looking for a balance transfer offer. The rates can be very low on these offers or even 0% but they will be a temporary rate and eventually the card will change to the normal interest rate for that individual’s credit rating. In addition, most companies will charge a balance transfer fee, which could outweigh the benefits of transferring smaller balances.

Credit card rates can also go up if the individual is late on payments. There is usually a late fee but in addition, it can result in a higher credit card interest rate. This also may reflect on their credit rating, which means new credit card rates may also be higher. To maintain the lowest interest rates possible on time payments are very important.

Introductory offers are those, which will be limited in time to 6, 9 or 12 months. Some cards may offer a year with no fee, or a few months to a year with an extremely low interest rate. However, the credit card holder should read the terms of service carefully to ensure that the rates after the introductory period are acceptable because they can end up paying more in interest than with a card without an introductory rate offer.

While credit cards are a part of almost everyone’s life they must be used carefully and chosen just as carefully with the needs of the cardholder in mind.

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‘do not Panic’ Message to People Worried About Debt

According to an industry expert, the number of people looking for help with their finances will increase in the first two months of 2008.

According to Heather Choudhary, a specialist debt adviser for the Bradford branch of Citizens Advice, the weeks following the festive period often see a rise in the number of people concerned about the various constraints on their money management. The representative went on to say that people should now face up to their debt, after funding Christmas with their credit cards.

She told the Telegraph & Argus: “The first wave of people contacting us about debt is towards the end of January and February, when the credit card bills start coming through.”

Meanwhile, figures reveal that 879 people were declared bankrupt at Bradford county court over the course of last year, up from the 843 recorded in 2006. In 2005, however, such consumers numbered just 671. Ms Choudary then claimed that in 2006 people who had serious debt problems owed somewhere between 20,000 pounds and 25,000 pounds. This year however, people seeking advice have debts up to 45,000 pounds, claimed the debts advisory service.

Such figures suggest that demands for payment on utility bills, personal loans, credit and store cards, groceries and other expenses are putting an increasing amount of strain on homeowners.

For those who are concerned about their ability to meet various demands on their finances, Ms Choudhary stated that “the first piece of advice we give is for people not to panic and not to bury their heads in the sand”. She claimed that there is a sufficient amount of monetary advice that people who may be worried about being able to make payments on loans and credit cards can access for free.

The Citizens Advice worker added: “Debt is never just about owing money, it’s connected to bereavement, employment or relationship break-ups. When people are in debt they feel full of shame and out of control. People need to be reassured that when they come to the bureau they aren’t going to be judged.”

Matt Barlow, chief executive of Christians Against Poverty, added: “Christmas is undoubtedly a time of overspending for many people across the UK and this statistic supports the testimony of many clients we have helped over the past.” He also said the first thing those who find that they are now in financial difficulties following the festive season “is not to panic”.

Upon seeking out money management advice, Britons who are looking to get their finances back on track and get into the red as soon as possible may wish to consider applying for a debt consolidation loan. This type of loan could be particularly useful for those struggling with living costs. In research conducted by Sainsbury’s Finance last year, day-to-day expenses were revealed to have increased by 4.2 per cent in the week between October and November.

For such consumers, debt consolidation may be a useful in merging numerous financial constraints into a single low-rate repayment.