Credit Cards in the UK

Switch on the TV or open a newspaper today and the chances are that you'll see yet another bank offering yet another credit card. The simple fact is that there's never been a greater choice of credit cards in the UK and consequently the importance of shopping around is paramount. The credit card business is hugely profitable for banks and financial institutions, which helps to explain why the competition is so fierce. When deciding which credit card is right for you there are a number of different variables to look at, including: interest rates, balance transfer deals and a host of 'extra' incentives.

Firstly you should look at the Annual Percentage Rate. The APR is the amount of interest you have to pay on the money you borrow. The cheapest credit cards in the UK offer an APR of around ten percent, but most companies' rates vary between 13 and 15% (figures which are generally accepted as being competitive. Many credit cards charge substantially higher APRs and there are a surprising number of people who are happy to settle for a payback rate of more than 20%. Anyone unfortunate enough to have had bad credit ratings will have a limited (and expensive) choice, which could be as high as 30%.

Although the APR is likely to be the sole most important factor when choosing which credit card best suits your needs, it's also worth looking at introductory offers and balance transfer charges. Companies wanting to lure customers away from rivals offer special low interest deals on money already owing, for example: you might get 0% APR on balance transfers for the first six months (which meant that you can move your debt without having to pay for it). Other institutions may allow you to pay off any outstanding balance over a longer period of time without charging you as long as you spend a certain sum of money each month. If you are someone who owes quite a lot of money and want to reduce your debts it could be worth shifting to a new card.

Finally it's worth looking at the 'extras' offered by the lion's share of UK credit card companies. Free travel insurance and some kind of purchase cover are fairly standard and you'll find that many companies offer a 'reward' scheme (which allows you to build up Points that can then be exchanged for anything from Air Miles to DVDs). Other 'sweeteners' include: Cashback deals and numerous prize draws and competitions. However, some of these incentives don't really add up to all that much and it's the APR and balance transfer rates that you should be focussed on.

 

 

 

 

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