Credit Card Charges and How to Avoid Them
It is one of the joys of the UK credit industry that prices of
credit, and in particular of credit cards, have continued to
fall over the past number of years. Today you can get zero per
cent on balance transfers, and even zero per cent on purchases,
offers that were simply unimaginable just a couple of years ago.
This is all the result of increasing competition in the market
place from alternative lenders and banks from abroad,
particularly US banks. However, there are still many charges out
there and it takes some care and consideration to make sure that
you don't end up paying far more than you should for your credit
cards. The main charge associated with credit cards continues to
be interest charged on outstanding balances. This is
traditionally how credit card providers have managed to rake in
the massive profits that they have become associated with. It
doesn't take much research to discover that the interest rates
on credit cards are among the highest on the market. While
mortgage rates and personal loan rates can easily be as low five
or six per cent, credit cards rates are easily over twenty five
per cent. This is due mainly to the convenience and flexibility
of credit cards as a source of needed money. If you find that
you are carrying over large credit card balances from one month
to the next, you are probably paying far more than you need to
for your credit. The best way to remedy such a situation is to
consolidate this credit.
Debt consolidation loans, typically secured over your home,
offer far lower rates of interest. You can then reduce your
outgoings to a single monthly figure that allows you to pay off
the debt at a reasonable rate.
Another way to avoid credit card interest rates is to take
advantage of zero per cent balance transfers. These can be great
opportunities and are offered by credit card providers who are
ever more eager to increase their market share and add you as a
customer. You will benefit from low or zero per cent rates on
any balances that you transfer over to the new card from other
credit cards. A word of advice however is to make sure you close
the original account. This avoids the temptation of racking up
further spending and improves your credit rating by reducing the
over all amount of credit available to you.
Other charges such as subscription fees are by and large a thing
of the past. Some credit cards still charge annual fees on the
basis that they offer other rewards or are more exclusive cards
but the general advice these days is that you can get just as
good results on cards that do not charge these fees so if you
are paying a fee, perhaps you will want to switch to a card that
is free in this sense.
Late payment fees and other penalties are incurred if you fail
to keep up with your repayment obligations and you should make
every effort to avoid these as they are completely unnecessary.