Credit Cards

If you have accumulated a balance on your credit card which you carry over from month to month, you should consider what interest rate you are you currently paying. If you're not on an introductory deal, you're likely to be paying somewhere between 12 and 20% APR. You should consider switching your debt to a 0% balance transfer credit card. You should then try your best to clear the debt before the interest-free period ends.

Building up a hefty debt on credit card is all too easy. A christmas spending spree, followed by bargain hunting in the January sales will leave many with huge credit cards bills. But rather than forking out a fortune in interest charges, transferring the debt to a 0 per cent deal will give you more breathing space to save up the cash to pay the balance off.

Many firms offer 0 per cent deals which run for 12 months or more including Virgin Money, Egg and RBS/Natwest.

The only drawback is the balance transfer fees which are typically £25 to £30 per £1,000 you transfer.

A survey by Abbey revealed that as many as three million credit card holders intend to switch debt to cards offering an introductory interest free period to new customers in 2008. The survey of over 1,000 adults found that cardholders had an average of £2,666 debt they wanted to switch.

Cashback
The financially disciplined who pay their credit card bill in full every month can use a cashback credit card to earn as much as 4% money back on any purchases. If you spend, say, £1,000 a month on the current marketing leading cashback card from Capital One which gives a standard 1%, but a bonus 4% cashback for the first 3 months, you could earn £210 in 12 months.