Beating the card tricks

Credit card companies are constantly offering great new deals that promise to solve all your financing dilemmas. But you need to know your way around the jargon and suspicious acronyms. Minding your language when reading through the fat envelopes that fall through the letterbox can pay.

When the offer says "zero % on balance transfers" it sounds exciting but you need to know exactly what is involved. can show you how to beat the card tricks by understanding and talking their language.

Annual Percentage Rate (APR)

This is the percentage rate of interest the card company will charge on your debt calculated on an annual basis. It is sometimes known as the ‘usual percentage rate’ indicating that it is the rate that will be applied after any introductory rate has expired. It is the best measure of the long term cost of the card. APRs can vary hugely. Barclaycard Simplicity offers an APR of 8.8%, whilst the Citi Platinum Master Card charges 16.9%.

Introductory Rate

Many card companies will offer a low introductory rate to tempt you their way. This will generally be 0% and means that you will not be paying interest. However introductory rates can apply to purchases – the money you spend on the card – or balance transfers – the money you switch to the card. That period can be anything from a few months to over a year, and you need to check what the rate will jump to when the offer expires. If you haven’t cleared your debts by then you could suffer a nasty shock.

Favourite 0% Purchase Credit Cards Deals

Company Purchase Deal Typical APR (variable)
Halifax One 0% / 12 months 15.9%
Citibank 0% / 11 months 16.9%
Barclaycard 0% / 10 months 14.9%
MBNA Europe 0% / 9 months 15.9%

Compare all 0% purchase cards

Favourite 0% Balance Transfer Card Deals

Company Balance Transfer Typical APR (variable)
Virgin Money 0% / 15 months 15.9%
Barclaycard 0% / 14 months 14.9%
MBNA Europe 0% / September 2008 15.9%
Halifax One 0% / 12 months 15.9%

Compare all 0% balance transfer cards

Low Life of Balance

This is similar to the ‘zero percent’ balance transfer cards but they are generally cards with a low rate that stays low until you clear your balance and not for a few months or a year!

Favourite Low Life of Balance Cards

Company Balance Transfer Typical APR (variable)
Citibank 4.89% 16.9%
Liverpool Victoria 5.76% 16.7%
Barclaycard 5.9% 14.9%

Compare Life of Balance cards

Low Standard Rate

Some cards don’t have introductory periods and then raise the typical APR dramatically but have a low standard rate that stays low.

Favourite Cards with a low standard rate

Company Typical APR (variable)
Barclaycard 8.8%
American Express 9.9%
Capital One 9.94%

Compare Low Standard Rate cards

Cash Back

This is a reward scheme where you are offered some money back for transactions using the credit card. Typically, cash back schemes offer anything from 0.1% to two per cent of card purchases, but both the interest rate and the terms and conditions for cash back schemes vary significantly between card companies.

Compare reward credit cards

Compare cashback cards

Fixed and Variable Rates

A fixed rate is one offered by a card company that will, at least in theory, stay the same for the lifetime of the balance. In reality it may be changed for a number of reasons. A variable rate is one that is hooked to the current base rate of interest, and will change accordingly. A good option if interest rates are on the slide, not so good if they’re heading up.

Annual Fees

Some card companies mane an annual charge for a credit card. This is essentially an administration charge and not all companies apply it.

Balance Transfers and fees

A balance transfer is quite simply a transfer of debt – your balance – from one card company to another, almost always in an effort to cut the interest rate on your debt. Some companies will offer a ‘zero per cent on balance transfer’ deal which means the debt that is switched will be interest free for a given period. If you’re looking to pay no interest on spending after you’ve switched cards you’ll need to look for a ‘zero percent on all new purchases’ deal.

Though many cards offer tempting introductory rates they will sting you with balance transfer fees. This is a charge for changing your balance from one card to another. Very few companies now have capped fees, meaning that they will instead charge you a percentage of the balance. For a balance of £10,000 this could be as much as £300.

Cash Advance Rate

This is the rate of interest charged for credit card transactions that involve the issue of cash – from across the counter or from cash dispensing machines. This will differ from the usual rate charged and is typically calculated from the date you receive the cash rather than from the statement date. Rates can be as high as 29 per cent so the general advice is to not borrow cash on your card and if you do use it for cash to pay it off as quickly as possible.

Still unsure which card to go for? Click here to compare all credit cards on MoneyExpert.

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