Credit Card Guide http://www.cardguide.co.uk/ en Copyright 2008 Mon, 08 Sep 2008 12:40:41 +0000 http://www.sixapart.com/movabletype/ http://blogs.law.harvard.edu/tech/rss Many credit card consumers do not have to pay interest
However, a report released earlier this year showed that in fact around 50% of credit card users are not actually paying any interest on their credit cards, and this is because they are repaying the balance on their credit cards in full each month, thus avoiding the need to pay any interest. Credit cards all offer a limited interest free period of up to around 59 days, and those that clear the balance within that time do not get charged any interest for using the card, which enables them to enjoy the convenience and ease of using a credit without having to pay for the privilege.

One industry official said: "With the encroaching credit crunch being felt by consumers through the price of credit and the bills that come through their front door, it is uplifting to see that more than half of credit card customers can still afford to clear their balance each month and are not relying on their credit card for day-to-day essentials, getting further and further into debt." He added: "The fact that we had no respondents who said that they took out a personal loan to pay off their credit card balance is a strong indication that the credit crunch is having an affect on the availability of credit to consumers, just as it is for people trying to get a good mortgage deal."

Those that do clear their balances in full each month can enjoy the freedom and benefits of actually making something back from credit card firms, as they can benefit from a rewards based credit card. These credit cards are ideal for those that pay their balance in full each month, as they offer rewards for spending on the card. Points or cash back can be earned, and the points can be redeemed against discounts, vouchers, retails rewards, and more. However, for those that spread their balance and get charged interest the rewards will not be worth it, hence these cards are not suited to those that wish to spread the balance.

Whilst the number of people that are paying their balance in full and avoiding interest charges is encouraging it is difficult to tell whether the number of people repaying their balance in full will stay at this level. This is because higher bills, food prices, and petrol costs are all impacting on household budgets, and many are now struggling to keep on top of their finances.]]> http://www.cardguide.co.uk/news/200809/many_credit_card_consumers_do_not_have_to_pay_interest.html http://www.cardguide.co.uk/news/200809/many_credit_card_consumers_do_not_have_to_pay_interest.html News Mon, 08 Sep 2008 12:40:41 +0000 Even less choice for balance transfer customers 0% balance transfer credit card. However, like other areas of finance the credit card industry has been affected profoundly by the global credit crunch, and officials are now warning that the choice of cards for those looking for balance transfer is becoming extremely limited.

Many balance transfer deals have been cut over recent months, with others disappearing from the market altogether. Credit card providers have also made a number of changes to their cards, with some having raised interest rates, balance transfer fees, and other charges, and others tightening up on their lending criteria to the point where only those with the best credit ratings can get their hands on a balance transfer credit card.

This has made things very difficult for those wishing to save money on their credit card balances by transferring balances, and in particular for those that like to switch credit cards regularly in order to save money on interest, known as being a rate tart. The lack of availability means that being able to switch your credit card balance has become far more difficult, and this could mean more people having to shell out a small fortune in interest – or pay higher balance transfer fees.

There are also concerns that this lack of choice and increased expense for consumers is having a knock on effect on consumers' ability to make other payments, including their mortgage repayments. One official said: "If people can't afford their non-priority debts anymore sometimes they'll stop paying their mortgage as well. It's definitely having a knock-on effect."

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]]> http://www.cardguide.co.uk/news/200806/even_less_choice_for_balance_transfer_customers.html http://www.cardguide.co.uk/news/200806/even_less_choice_for_balance_transfer_customers.html News Fri, 06 Jun 2008 12:25:26 +0000 Pre-paid payment cards could help some consumers
However, it is not always possible for all consumers to get their hands on a credit card, and some people, such as those with poor credit, may not even be able to get a bank account that offers a debit card facility, thus reducing their options when it comes to plastic payment methods.

One industry official said that there were many consumer groups that may be able to benefit from pre-paid payment cards such as those with poor credit or those heading on holiday. He stated: "While the strength of the euro is of concern to holidaymakers, using the wrong foreign exchange product can be even more costly. If you are stuck with an uncompetitive debit or credit card and don't have time to get a new one, prepaid cards can be a good option. And you don't need to worry about overspending on your holiday budget."

An official from a firm that offers a pre-paid card with a credit builder facility added: "The significance of this is huge for people who have either lost their credit eligibility or for migrants who have no credit footprint at all. The creditbuilder feature enables these people to show credit card, loan and mortgage providers they can regularly make monthly repayments and so build their rating at no extra cost. It helps people take the first step back to credit eligibility."

However, consumers should remember that the cards are unregulated and therefore consumers are not protected under the Consumer Credit Act. One official added: "Prepaid cards are not for everyone. People have a choice about whether the benefits of having the card are worth the fees, and they are not forced upon people."

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]]> http://www.cardguide.co.uk/news/200806/prepaid_payment_cards_could_help_some_consumers.html http://www.cardguide.co.uk/news/200806/prepaid_payment_cards_could_help_some_consumers.html News Fri, 06 Jun 2008 12:23:45 +0000 Credit card customers still face rising costs Office of Fair Trading placed a ceiling limit on the amount that card providers were allowed to charge for penalty fees when customers made late repayments or exceeded their credit limits.

One industry official recently stated: 'In April 2006 the average purchase rate on a credit card was 14.9%; today this has jumped to 16.4%. Previously, whereas only a select number of customers were being penalised, now all borrowers are paying the price. For any customer who is paying their bill in full each month, the rate increase will have no impact, but with many households struggling with increasing financial pressures, those who only repay the minimum will be hardest hit. Anyone with a balance of £5,000 repaying just 2.5% per month will end up paying an additional £755 in interest from the 1.5% increase in purchase rates.'

She also added: 'The average interest rate for cash transactions have seen a marked increase from 18.1% to 24.3%. On top of this, the majority of institutions have increased cash advance charges. Previously the majority charged 2%, with a minimum of £2: now the majority charge 3%, with a minimum of £3.' She added: 'Taking cash out on credit cards has always been an expensive way of borrowing, particularly as interest is charged from day one. But with the 6.2 percentage-point increase in the average rate, customers who are relying on cash advances to balance their monthly budget will find a bad situation is now even worse.'

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]]> http://www.cardguide.co.uk/news/200805/credit_card_customers_still_face_rising_costs.html http://www.cardguide.co.uk/news/200805/credit_card_customers_still_face_rising_costs.html News Fri, 23 May 2008 09:01:02 +0000 Credit card rates continue to rise
Research shows that the average rate on a credit card for purchases has risen by 0.56% to 17.12%. There has also been a rise in the average rate on balance transfer cards, which have gone up by an average 0.83% to 15.95%. Officials have stated that this is just one of the ways in which credit card providers are trying to recoup losses from both the £12 cap on penalty fees and the global credit crunch.

Other steps that card companies have taken to claw back money includes cutting the spending limits of customers, raising transaction fees and charges, and even withdrawing credit facilities from those that they class as higher risk customers.

"Most of us would normally seek out a new zero per cent deal to tide us over the bad times, but with lenders playing a cautious game, getting one of those cards is more difficult than it used to be. This means more of us will have to use our current credit card and if the 0 percent deal has expired, you'll be borrowing money at a rate of around 16 percent; be careful what you spend on the plastic because the interest will soon mount up."

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]]> http://www.cardguide.co.uk/news/200805/credit_card_rates_continue_to_rise.html http://www.cardguide.co.uk/news/200805/credit_card_rates_continue_to_rise.html News Fri, 23 May 2008 08:59:39 +0000 Costs for credit card customers keep going up
It was two years ago that the Office of Fair Trading imposed a £12 ceiling limit on penalty fees by credit card firms, and it is thought that the main reason behind the hikes is so that credit card firms can recoup some of the losses incurred as a result of this cap.

One industry official said: 'In April 2006 the average purchase rate on a credit card was 14.9%; today this has jumped to 16.4%. Previously, whereas only a select number of customers were being penalised, now all borrowers are paying the price.

For any customer who is paying their bill in full each month, the rate increase will have no impact, but with many households struggling with increasing financial pressures, those who only repay the minimum will be hardest hit. Anyone with a balance of £5,000 repaying just 2.5% per month will end up paying an additional £755 in interest from the 1.5% increase in purchase rates.'

She went on to state: 'The average interest rate for cash transactions have seen a marked increase from 18.1% to 24.3%. On top of this, the majority of institutions have increased cash advance charges. Previously the majority charged 2%, with a minimum of £2: now the majority charge 3%, with a minimum of £3.'

She added: 'Taking cash out on credit cards has always been an expensive way of borrowing, particularly as interest is charged from day one. But with the 6.2 percentage-point increase in the average rate, customers who are relying on cash advances to balance their monthly budget will find a bad situation is now even worse.'

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]]> http://www.cardguide.co.uk/news/200805/costs_for_credit_card_customers_keep_going_up.html http://www.cardguide.co.uk/news/200805/costs_for_credit_card_customers_keep_going_up.html News Fri, 16 May 2008 13:01:42 +0000 Abbey launched innovative credit card
For the first six months cardholders will not be charged any cash advance fees, which is good news for those that tend to use their cards to take money from the cash point. In addition to this there will be no foreign exchange fees, which means that consumers heading abroad on their holidays over the coming weeks will be able to enjoy using their credit card without being hit with mounting fees and charges for using the cards abroad.

An official from Abbey said that this card was the first to have eliminated all of these different fees in one go.

He said: "We promised the market that we would continue to innovate and that is exactly what we've done."

The foreign exchange fee normally charged by Abbey is 2.75% and there is normally a balance transfer fee of 2.5%. However, customers of the new Zero card will not have to pay a balance transfer fee either, which will save them even more money.

One industry official stated: "The launch of this card is fantastic news for consumers. Not only will those looking for a short-term balance transfer deal benefit but also those who are about to embark on their summer holiday. In a world where rates and charges are increasing on credit cards its good to see a lender bucking the trend and removing some of these charges."

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]]> http://www.cardguide.co.uk/news/200805/abbey_launched_innovative_credit_card.html http://www.cardguide.co.uk/news/200805/abbey_launched_innovative_credit_card.html News Fri, 16 May 2008 12:59:56 +0000 Increase in number of requests for credit reports
According to the credit reference agency Experian twice as many people are now applying for copies of their credit reports compared to six months ago, as many consumers try and work out why they are being refused credit and try to determine how they can improve their credit in order to get the finance that they need. Officials from the credit reference agency said that the credit crunch and its effects seem to have helped consumers to learn the importance of keeping their credit file in order.

An official from Experian said: "Up to 20 per cent of people now check their credit report before applying for credit," adding: "the vast majority use the internet to do so in order to get immediate access to their score, and also to receive alerts if their credit status changes."

However, despite taking greater care in checking their credit, some experts state that many consumers are continuing to spend frivolously using credit simply to keep up with friends and neighbours. One official said: "Using credit to fund a lifestyle you can't really afford can lead to huge financial problems."

He added: "You'll soon make yourself less financially attractive to lenders and find that you can't get access to the best possible credit deals. With lenders reacting to the credit crunch by tightening their lending criteria, you can help stay on top of your borrowing and how well you're managing your finances by regularly monitoring your credit report."

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]]> http://www.cardguide.co.uk/news/200805/increase_in_number_of_requests_for_credit_reports.html http://www.cardguide.co.uk/news/200805/increase_in_number_of_requests_for_credit_reports.html News Sat, 10 May 2008 04:43:46 +0000 Credit card offer from M&S balance transfers have to be made within six months of account opening, and the transfer fee that will be charged by Marks and Spencer will be 2% with a minimum charge of £5.

In addition to enjoying interest free credit on balance transfers and purchases, customers will also be able to earn points for their spending, with bonus points available for certain purchases. All points that are collected on the card are concerted to Marks and Spencer vouchers four times a year, and customers can then use these vouchers to spend on goods instore. The interest rate charged on the credit card is 18.9% variable.

Marks and Spencer has also been trying to tempt customers with a cash back offer on personal loans, enabling borrowers to earn 25% cash back on a personal loan taken out with the company. Customers that take out a personal loan by 3rd June of this year will be able to qualify for the cash back offer, and can earn back 25% of the interest that they have paid once their final repayment has been made, providing the loan was taken out over thirty six months or longer.

The interest free credit offer on the Marks and Spencer credit card is offered with immediate effect, and could attract interest from a number of people that want to transfer expensive balances or wish to enjoy interest free credit on their spending.

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]]> http://www.cardguide.co.uk/news/200805/credit_card_offer_from_ms.html http://www.cardguide.co.uk/news/200805/credit_card_offer_from_ms.html News Sat, 10 May 2008 04:41:02 +0000 Credit crunch has minimal impact on credit card transfers
The data shows that many people who are struggling with higher interest debts such as those on standard credit cards are now trying to reduce their outgoings by transferring to a low interest or 0% interest balance transfer card. However, research also shows that many may now find this process difficult or even impossible, as many credit card providers have severely restricted lending in light of the credit problems, and have really tightened up on their lending criteria.

One official involved in the research stated: 'There is a significant market for cards offering balance transfers as our research indicates that 40% of card holders think it will take longer than one month to clear their current balance.' The study involved surveying around one thousand people. It found that whilst the average amount being transferred to another card was around £1555, there were some consumers that were transferring over £4000.

Whilst consumers that transfer balances from higher interest credit cards onto a 0% balance transfer card can save on interest, they should be mindful that there is a 2-3% transfer fee to pay in most cases, and also that availability of these cards is vastly reduced compared to a year ago, which means some may find that they cannot get a transfer card.

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]]> http://www.cardguide.co.uk/news/200804/credit_crunch_has_minimal_impact_on_credit_card_transfers.html http://www.cardguide.co.uk/news/200804/credit_crunch_has_minimal_impact_on_credit_card_transfers.html News Mon, 28 Apr 2008 06:43:04 +0000 Credit card providers luring customers into borrowing
The Shadow Business Secretary, Alan Duncan, stated that with offer like this borrowers are eventually left to try and pay back interest that they simply cannot afford. He added that once customers hit problems where they could not afford repayments and interest the credit card companies were likely to simply 'spit them out'.

Mr Duncan said that lenders had to try and realise the human misery that this sort of situation was resulting in, and added that this was not acceptable practice. He said that what many card providers were doing amounted to no more than irresponsible lending, describing it as 'corporate irresponsibility.'

However, despite these comments many card providers have been rejecting an increasing level of applications, and some have cut credit limits or even withdrawn credit card facilities for those that consider to be high risk.

The MP also said that if the Conservative Party gets into power then this situation is likely to change. In the meantime debt charity officials have urged struggling borrowers to consider a debt management plan, and certainly to seek financial advice from a debt charity or the Citizen's Advice Bureau, if they are struggling to keep up with their debt repayments on credit cards or other forms of finance.

Tom Smith
19th April 2008]]> http://www.cardguide.co.uk/news/200804/credit_card_providers_luring_customers_into_borrowing.html http://www.cardguide.co.uk/news/200804/credit_card_providers_luring_customers_into_borrowing.html News Sat, 19 Apr 2008 09:49:06 +0000 Consumers outraged by credit card cuts
As part of a nationwide operation many credit card firms are trying to cull credit limits in the wake of the global credit crunch, and as a result of this many customers have seen their credit limit slashed to just £100 above their existing balance. No prior warning was given about the credit limit cuts, which has left many cardholders feeling angry and humiliated after trying to use their cards.

One solicitor who had his limit cut from £5000 to £700 said: 'I had to endure the humiliation of having it declined twice in B&Q. There was a long queue behind, I was embarrassed, but luckily had other cards with which to pay it. I have had the card for 10 years and, surprise, surprise, I've never missed a payment and always paid off the balance at the end of the month. But what really made me angry was that after I asked them why they didn't give me some notice, they said that if they did that, I could just rush out and spend wildly in an effort to keep my balance up. I found that incredibly insulting.'

Although the process has been used by a number of different banks, all have used the same procedure of cutting the limit to £100 over the existing balance. Banking officials stated that the reason that customers were not informed of the move was because they would have then had the opportunity to go out and spend on the card in order to increase their existing balance, and subsequently increase their credit limit.

Many of the customers that have been affected by the move have stated that they have good credit and have not missed repayments, as was the case with many of the Egg customers that recently had their credit card facilities withdrawn.

Tom Smith
26th March 2008

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]]> http://www.cardguide.co.uk/news/200803/consumers_outraged_by_credit_card_cuts.html http://www.cardguide.co.uk/news/200803/consumers_outraged_by_credit_card_cuts.html News Tue, 25 Mar 2008 16:52:07 +0000 Credit crunch does not stop credit card addicts
Research suggests that many Brits are still spending way above their means via the use of multiple credit cards, and in an increasingly volatile economic climate are continuing to build up huge levels of debt. In the past year along one third of Brits have applied for another credit card, although many may have faced increased difficulties over recent months as a result of the global credit crunch, which had resulted in tighter lending conditions.

One industry professional expressed concern over the way in which many people are using and abusing credit cards, resulting to increased debt and financial problems rather than the ease, convenience, and flexibility that credit cards are designed to offer. He said: 'It is entirely healthy if people are swapping debts from one card to another, taking advantage of 0% deals to ensure that they pay as little interest as possible. But anyone who is trying to juggle five or more credit cards and owes money on all of them is in real trouble.'

This information comes at a time when experts have predicted that an increasing number of people are likely to become insolvent due to debts and unmanageable financial commitments, and at a time when many are already struggling with financial woes, such as increased energy bills, higher food and petrol costs, and higher mortgage repayments.

Tom Smith
21st March 2008

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]]> http://www.cardguide.co.uk/news/200803/credit_crunch_does_not_stop_credit_card_addicts.html http://www.cardguide.co.uk/news/200803/credit_crunch_does_not_stop_credit_card_addicts.html News Fri, 21 Mar 2008 07:09:50 +0000 Clear your credit card balance quickly and enjoy a fee free transfer 0% balance transfer credit card that has been launched by Capital One.

Most balance transfer credit cards charge a 2-3% transfer fee based on the amount being transferred in total, but many offer long 0% periods with some offering up to fifteen months. However, the Capital One card offers just six months of interest free credit on balance transfers, but for those who can repay the balance within this time this card could prove very effective because there is no transfer fee to pay.

Consumers that want to take advantage of the Capital One offer will need to meet the eligibility requirements, and this means having a good credit history, which is required for most balance transfer cards.

One industry official stated: 'Balance transfer fees have increased with many being uncapped, lenders have tightened up their credit scoring criteria, so you need almost spotless credit history to get your hands on one of these deals. If you do, the interest free limits will be smaller than they used to be.'

After the initial six month interest free period any remaining balance will be charged at the lender's standard variable rate. Consumers need to weigh up whether they can repay the balance within the six months, or if not whether it will be more cost effective to pay the transfer fee and transfer to a card that offers a longer interest free period.

Tom Smith
12th March 2008

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]]> http://www.cardguide.co.uk/news/200803/clear_your_credit_card_balance_quickly_and_enjoy_a_fee_free_transfer.html http://www.cardguide.co.uk/news/200803/clear_your_credit_card_balance_quickly_and_enjoy_a_fee_free_transfer.html News Wed, 12 Mar 2008 04:42:59 +0000 What to look for with 0% balance transfer cards 0% balance transfer credit cards have become an effective way to save money on interest and enjoy more affordable credit card spending. The purpose of the 0% balance transfer card is to enable cardholders with high interest credit cards to transfer the balances from their higher interest credit cards onto the 0% balance transfer card, and then enjoy a period of interest free credit within which to repay the balance without being charged any interest.

Using 0% balance transfers is simple and convenient, as you can get the new credit card provider to transfer your old credit card balances for you, so you will not have to go to any trouble. If you are paying a high level of interest on your current credit card debts then transferring to a 0% balance transfer card could make a big difference to the amount that you end up paying on your total debts. However, although there are many benefits when it comes to a 0% balance transfer card there are also things that you need to look out for.

One of the things that you need to keep your eye on with a 0% balance transfer credit card is the transfer fee that is charged by the credit card provider. Most credit card providers will charge a transfer fee of between 2-3% of the total amount that you are transferring onto the card, and this means that the more you are transferring the more you will pay. Some cards have a minimum and maximum transfer fee limit, and you should check to see what these are.

The transfer fee charged can vary from one credit card to another so it is important that you compare a number of 0% credit cards in order to find a transfer card that charges a fee that is not too high, otherwise you may find that you are paying a fortune in order to transfer your balance. However, you need to also take into consideration how long an interest free period is on offer from the credit card provider, so you need to balance both factors in order to get the card that best suits your needs and your pocket.

Another thing that you need to look out for with these credit cards it the tempting offers that credit card providers may through at you also offering a number of months' interest free credit on purchases. However, do not get fooled by this debt trap, as the purchase interest free period is usually far shorter than the interest free period on the transferred balance, and this means that your purchase balance will get trapped behind the transferred balance where it will start to accrue interest once the 0% period on purchases is over.

In the meantime any repayment that you make will be applied to the interest free transferred balance, which will leave your purchase balance trapped for even longer, where it will accrue even more by way of interest.

Tom Smith
10th March 2008

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]]> http://www.cardguide.co.uk/news/200803/what_to_look_for_with_0_balance_transfer_cards.html http://www.cardguide.co.uk/news/200803/what_to_look_for_with_0_balance_transfer_cards.html News Mon, 10 Mar 2008 06:43:11 +0000