How to avoid high credit card interest rates
By UK CreditCards.com
Banks and card providers are making huge sums from consumers paying unnecessary interest on their borrowings. According to the charity Credit Action, Brits pay an average of £179 million in personal interest every day -- including in credit card interest.
However, for most cardholders, paying hundreds of pounds in credit card interest is avoidable. You just need to do your research ahead of time. Here are three ways to avoid paying high credit card interest rates.
1. Take advantage of 0% purchase deals
If you're planning to use a credit card to make a high value purchase, then shopping around for the best no interest credit cards should be your priority. 0% APR purchase credit cards allow you to pay zero interest on your purchases for a specified period -- typically between 3 and 9 months.
Bear in mind that if you haven't paid off your balance when the 0% period expires, you will have to pay interest at your card provider's standard rate. However, if you can afford to repay the total balance before the end of your promotional deal, then a 0% purchase card may be a good choice for you.
2. Transfer your balance
If you currently maintain a high balance on your credit card, consider transferring that balance to a credit card with a 0% balance transfer offer. With fierce competition in the credit card market right now, there are lots of promotional deals on balance transfers that offer low or nil interest rates for periods of between 6 and 18 months.
Transferring the balance from one credit card to another is quick and easy. You simply provide details of your existing credit cards to the new card provider, and they will arrange the transfer. Bear in mind that you may pay a fee for transferring your balance to another card, even if the transfer is at a 0% rate. Balance transfer fees are generally around 2 to 3% of the balance that you switch, and so they can be costly.
3. Pay off your balance every month
The simplest way to avoid paying high credit card interest rates is to pay off your balance in full every month. If you pay your entire balance within the ‘free credit' period offered by your card, you won't pay any interest.
Published: 8 July 2011
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