Don’t be left with Egg on your face

Credit card companies have been getting some serious stick as they struggle for business and profits in the credit crunch.

Egg in particular faced allegations of double-dealing after cancelling the cards of 161,000 customers but other big names have also endured some flack.

Barclaycard, and the Co-Operative Bank, among others, have chosen to reduce the credit limits of many of their customers, but doing so without letting those customers know has provoked a fierce reaction from some.

Times are tough for the credit card industry as a whole and it doesn’t look set to ease too soon. With providers tightening belts and adopting a more cautious outlook MoneyExpert.com offers some timely advice on how to negotiate the delicate business of switching and applying in the credit card minefield.

Something for everyone

Before wading too deep into credit card misery it’s important to remember that there are a huge number of providers out there. Though lending criteria may be tightening it’s almost inevitable that whatever your credit rating there will be a card available.

Apply in haste, repent at leisure

Despite the number of cards on the market, however, research from MoneyExpert.com at the end of last year found that 3.27 million people had been turned down in their search for plastic. That’s a huge number and suggests that people aren’t taking the time to properly research the market and marry up their own situation to the criteria demanded by the providers.

MoneyExpert.com offers a free credit profiling service which helps people to understand their likely credit profile by answering straightforward questions about their credit history. MoneyExpert.com can then recommend credit cards from providers who offer deals to customers with similar profiles, thereby lessening the chance of rejection.

Not only do you save time bypassing any irrelevant application procedures, but you protect your credit rating from any black marks that a rejection brings with it.

Be a discerning rate-tart

When switching from one card provider to another it’s just as important to know what’s available and make the most of the market. Some 5.9 million credit card users have done so in the last six months so there’s certainly no need to feel a sense of loyalty to your current provider.

However, credit card companies are cottoning on to the so-called ‘rate tart’ trend and many are adjusting their balance transfer fees, the charge made as a percentage of the balance you transfer, to inflict a heavier penalty. There are now only seven credit cards with capped balance transfer fees as opposed to 18 this time last year, meaning you need to be more careful in calculating the amount you could be charged.

While there are still plenty of 0% deals it’s important to keep an eye on the fee transfer fee or you could find any 0% benefits soaked up in charges. For example, a £5,000 balance transfer could cost as much as £150 with a 3% fee, which is not unusual.

The providers that offer credit cards with capped balance transfer fees are Citibank, John Lewis, LV= and Virgin Money. But if the idea of paying any fee on a balance transfer at all is too unpleasant then you might do better to look at a life of balance deal. You won’t get the headline catching 0% rate on the money transferred but the interest you pay will be constant and competitive, allowing you to structure your repayments and get back in the black.

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