Credit Cards

Rates on the rise
Consumers are paying the highest credit card interest rates for almost a decade despite the Bank of England's rate standing at an all time low of just 0.5%. Figures reveal that in June 2010 the average rate charged was 16.69%, which is the highest since the 16.94% rate set in February 2002. However there are still many introductory deals available for new customers, so its worth looking around to see if you can get a better rate. Introductory deals on cards will remain on offer for the foreseeable future as card compaines look to attract new customers in the hope they will make money from the interest charged at the end of any introductory deal.

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.

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.

Credit rating matters more than ever
Following the credit crunch, your credit rating matters more than ever. The best deals are often reserved for people with a glowing credit report.

Locate the best deals for you
A number of websites provide an overview of the deals available and can help you select the best card for you. For instance, bestukcreditcards.co.uk provides an overview of the best 0% credit cards for purchases and balance transfers. Also moneyfacts.co.uk provides details on what it terms are the bestsellers and creditseeker provides insight into some of the 0% balance transfer credit cards currently available in the UK.