Entries Tagged 'credit cards' ↓
May 28th, 2008 — credit cards
1. Interest on Debt
This is the biggest form of profit. With credit card rates nearing 18%, that makes a very profitable rate of return. It is much higher than a standard loan. True, some people may always pay off their debt; but enough people maintain a debt balance on their credit card which can last for several years.
2. Late Fees
Recently, these have come in for criticism from the OFT. But, fees for late payment and missed payment can be costly for the consumer and profitable for the credit card company. Continue reading →
March 6th, 2008 — credit cards
Credit card companies have been known to charge between £20 and £35 for small indiscretions such as late payment fees. However, a ruling by the OFT, means that these charges are likely to be deemed ‘excessive’ and you may be entitled to a refund.
A review by the Office of Fair Trading found that charges on credit cards were deemed inappropriate for the inconvenience caused to the credit card company.
In April, the OFT stated that credit card default charges had been generally set at a significantly higher level than was considered fair and set a £12 threshold for OFT intervention unless there were exceptional business factors. Continue reading →
February 26th, 2008 — credit cards
Egg is a credit card company who tried to create an image of being a different and consumer friendly credit card. However, there recent actions to tell over 140,000 consumers that they can no longer keep their credit cards because they are a ‘credit risk’ has met with widespread criticism.
Egg wrote a letter saying that people’s credit card would stop working within 35 days. Yet, many egg credit card users say that they have never missed a payment.
Labour MP and former consumer affairs minister Nigel Griffiths made a complaint to the Financial Services Authority FSA. They in turn have forwarded the complaint on to the OFT. They are now investigating the case.
Continue reading →
February 11th, 2008 — credit cards
These are some tips for O% Interest Credit Card Balance Transfers. For the past 4 years, I have been transferring a balance of £3-4000 from one credit card to another. During this time, I have never paid interest on this credit card debt. I have been careful to take advantage of introductory credit card deals which offer rates of 0% for 6 -12 months. This debt has been valuable for improving cash flow and avoiding having to take out more expensive forms of borrowing. These are some tips to make the most of 0% Credit Card Balance transfers
Don’t wait until you Need To Borrow Money
If you suddenly need to borrow £3,000 it is easier, if you have already a balance on a credit card of £3,000 at 0%. Make big purchases on a credit card and transfer them to the credit card which is offering 0% for balance transfers.
Don’t Be Greedy
If you start to apply for many credit cards, you reduce your chance of getting approved. Don’t be greedy and try to manage several cards at 0% at once, just borrow what you need to improve cash flow.
Make Sure You Never Miss a Payment
If you are taking advantage of a 0% credit card balance transfers it is even more vital than ever to never miss a payment. Make sure you always pay off the minimum balance. I highly advise setting up a direct debit to automatically pay the minimum balance. This reduces the risk of forgetting or a cheque getting lost in the post (It also saves alot of time.) If you miss a payment the credit card company will invariably revert your balance to the standard rate and your credit rating will be damaged. (If this does happen try to fight it)
Continue reading →
November 21st, 2007 — credit cards
1. 6 week interest free Period before paying
When you make a purchase on a credit card, it takes upto 6 weeks before you have to pay the credit card company. This is an easy way of gaining an interest free period. Useful, if you are expecting income soon.
2. There is no need to pay any Interest on Credit Cards.
People often focus on how expensive credit cards can be. However, if you manage your credit card carefully there is no need to pay any interest at all. Every financial product can be expensive. - A bank account will charge a lot if you go overdrawn. Credit card company’s will charge high interest. But, as long as you don’t spend beyond your means there is no reason to have to pay any of these interest payments.
Continue reading →
November 20th, 2007 — credit cards
These are some of the most common mistakes with using credit cards. These mistakes are easy to make and they can be very costly for your personal financial situation. If you are new to using credit cards make sure you avoid making them.
1. Withdrawing Cash on a credit card
If you withdraw cash on a credit card, you will pay the highest interest rate of upto 21%. Avoid at all costs withdrawing cash on a credit card. For example, avoid buying foreign currency on a credit card because this is the same as withdrawing money. Plan ahead, if you need to borrow cash, find any alternative to using a credit card to borrow.
2. Late penalties
If you forget or make a late penalty for your credit card, you will gain a negative credit on your credit card. This makes it difficult to get future credit. You will also gain a penalty of between £20 and £50. Furthermore, if you have any special introductory rate such as 0% balance transfers this will be lost, and the balance will be charged at the S.V.R. This is a real disaster; avoid this eventuality by setting up a direct debit.
Continue reading →
October 23rd, 2007 — credit cards, mortgages
A report by You Gov suggested that 8% of young people are paying their rent or mortgage with a credit card. This is despite the fact that mortgage companies are often unwilling to permit credit card payments.
The rise in use of credit cards is due to the increased cost of living in the UK. Rents and house prices have been rising causing homeowners, especially young homeowners to spend upto 50% of disposable income on rent and mortgage.
The Use of Credit Cards to pay mortgage is cause for concern.
The majority of credit card users pay off their balance at the end of the month. Thus paying on credit card gives you extra time to meet the payment. However, for those who struggle to pay their balance in full, they are likely to face interest rates of upto 18%. In effect they are borrowing at 18% to meet mortgage debt at 6%
A report by charity Shelter said that 1 million Britons have used credit cards to pay rent or mortgages in the past 12 months.
A big cause for concern is that a significant % of people are using credit cards to withdraw cash. Withdrawing cash on a credit card can gain an interest rate of upto 25%, creating a real problem of future debt payments.
With higher interest rates continuing to bite, this could cause serious problems in the future.
Continue reading →
October 1st, 2007 — credit cards
1. Avoid paying debt at 17%
Credit cards can be very useful if you are able to pay off the balance. However, when you start paying interest at 17%, the advantages are easily outweighed by the very high interest payments. Therefore, always seek to pay off the balance and avoid these rates of interest. These are the best strategy’s for avoiding paying credit card debt interest.
- Avoid overspending. - Don’t get carried away, just because you are paying with plastic rather than cash.
- Transfer the debt to a lower interest paying loan like mortgage or personal loan.
- Don’t see credit cards as a way of borrowing. See it as a convenient way of borrowing.
2. Pay Electronically at latest date.
Many credit card companies give you up to 6 weeks to pay for your balances. When your statement arrives often you do not need to pay for 3 weeks. It is tempting to pay the account straight away. However, if you are short on cash, you can leave the payment until nearer the payment date. If you do pay close to the deadline make sure you:
- pay electronically for guaranteed payment (don’t rely on the post)
- Make sure you are not going to forget.
3. How to Deal with Missed Payment
If you don’t have a direct debit for minimum payment and you miss a payment by accident you should contact your credit card company as soon as possible. If you pay it as soon as you realise it may not incur a penalty for your credit rating. However, if is more than a few weeks late then it will count as a negative rating. In this case, the best thing to do is to try and challenge the negative rating. You could try write to the bank and apologise, saying it got lost in the post. If it is your first time they may agree to write off the negative credit rating
4. Use one Card for Collecting Points
Choose one credit card to put the majority of your spending on. It is best to choose a card that has an attractive points / reward system. This credit card you should always pay off at the end of the month.
Continue reading →
June 12th, 2007 — credit cards
When getting a new credit cards there are certain things to look for to make sure you get the best deal.
1. Which Rate is most important?
Which is most important a low introductory rate for 6 or 12 months or a low Annual Variable Rate? If the card is going to be long term, don’t be too excited about good deals for first 6 months.
2. How long is the introductory period?
This can range between 3 and 12 months. If possible, I look for 12 month deals, it save the hassle of switching too often.
3. Do you get points for spending?
This is relatively insignificant if you are using it to move money around. But, if you spend a lot on a credit card it can be an important consideration.
Continue reading →
