Credit Card Firms Hike Interest Rates ñ Again! Credit card firms have consistently hiked the cost of buying goods and services on plastic since the summer of 2006.MoneyExpert.com research shows that average standard rates on purchases have increased almost two full percentage points from 16.1 per cent in August 2006 to 18 per cent now.And meanwhile the base rate of interest has plummeted and even the inter-bank cost of borrowing has fallen dramatically.
Credit card firms are charging more and paying less to borrow money themselves ñ meaning bigger profits while customers suffer.
Check What Youíre Paying
If youíre unsure what youíre paying in interest check your credit card terms and conditions as you could be being charged significantly more than you were three years ago. Many of us may think the cost of borrowing on our credit cards hasnít changed or should even have decreased ñ but you could be in for a shock when you read the small print.
Between April and July 2008 as many as 19 credit card providers increased their new-spend interest rates. American Express, RBS, Tesco and ASDA have all increased their standard APRs on purchases over the past three years.
Are you on the lookout for a new credit card? There are some great deals to be had ñ MoneyExpert.com takes you through the options.
Balance Transfer Credit Cards
Things are very competitive at the top end of the credit card balance transfer league. There are plenty of zero per cent introductory offers over 12 months but the cards right at the top of the tree are battling it out with interest-free periods of 15 and even 16 months.
But – whether you sign up for Virgin Moneyís 16 month credit card or NatWest or HSBCís 15 month deal, youíll still be hit with fees for transferring your debts onto the card.
Typically you can expect the fee to be just under 3% of your balance ñ so if you were to transfer £7,500 onto a new Virgin Money credit card you could expect to pay £223.50 for the privilege.
New purchase Credit Cards
If itís new purchases youíre after then you will have some way to go to beat the 9 months interest free offered by Halifax and Bank of Scotland on their All in One Card.
The card also comes with a lengthy interest free balance transfer period of nine months ñ so itís a good all rounder and one to consider if you anticipate making some large purchases soon but you also need to service some existing debts.
Cashback Credit Cards
You should aim to find a cashback credit card with a 3% return on your first three monthsí purchases.
After that card providers tend to reduce the rewards you receive. Typically youíll be looking at earning around 1% to 1.5% return on every purchase you make once your three months is over.
The catch is that cashback credit cards arenít the most competitive in the marketplace. Theyíll have less competitive balance transfer deals and will probably have high standard interest charges. So once your deals expire you might well need to switch to a more competitive offering ñ or, more sensibly, just pay off your balance in full each month and you can take advantage of all the benefits without spending a penny on interest.
Click here to compare all credit cards.