Warning: Choosing the wrong credit card could cost you thousands
By UK CreditCards.com
Are you looking for the best UK credit card?
If so, it is vital that you pick the right card. Not all credit cards are the same, and so you need to find a card that is appropriate for your specific needs. Remember that credit cards are like tools in a tool box -- you have to pick the right one for the job.
In simple terms, most credit cards fall into one of three types:
- Balance transfer cards -- Offer low interest rates for transferring a balance from an existing card to a new UK credit card
- Rewards cards -- Offer incentives, such as bonus points or cash back, based on the amount you spend
- Purchase cards -- Offer low rates on the money you borrow to buy goods and services
Balance transfer credit cards offer low interest rates on balances that you transfer from other credit cards. The deals generally involve a very low rate for a period of 6-12 months -- and sometimes they offer a low rate for the lifetime of the balance.
Bear in mind that you will probably be charged a fee of between 2 and 3% for making a balance transfer.
Credit cards with "purchase" deals are suitable for you if you can't afford to pay off your credit card debt in full at the end of every month.
If you plan to maintain a balance on your card following a purchase, make sure that you find a deal that offers a low interest rate for a certain period. This means that you will minimise the interest you pay on the goods or services you have bought using your card.
If you plan to use your credit card regularly, but you don't maintain a balance, rewards credit cards could be perfect for you. Rewards cards award points, cash back or Air Miles based on the amount you spend on your card.
If you pay off your credit card debt every month, you can use these cards to generate some useful savings.
Published: 28 February 2011
- 5 financial questions you should ask your partner before getting married – Getting married is exciting. But it's also a huge financial commitment. Here are five essential questions you should ask your partner before you walk down the aisle ...
- 4 wrong ways to pay off credit card debt – If your credit card bill is due and you're short on cash, it can be tempting to take out a cash advance or use another card to pay the bill. But the temporary solution could wind up backfiring ...
- What to do when your credit card application is declined – Was your application for a new credit card recently denied? Rejection hurts; but you can learn from it. Here are four key steps that you should take to make sure it doesn't happen again ...