With the amount of special offers on credit cards today, choosing the best value card issuer to go with can be difficult. Things have changed since the
first credit card was introduced to the UK by Barclaycard in the early 70's. Where once the credit card was more like a charge card, with a limit of just £100, today it
is possible to borrow large amounts at comparatively low interest rates.
There are a wide variety of credit card offers available today all promising great deals in differing and confusing manners. These vary from the introductory grace period 0% apr credit card, to air miles, or cash returns given if you spend a certain amount in a partner store. Put in simple terms, the different types of credit card offers can be categorised as follows:
0% Balance Transfer – these are the most common type of credit card offer, and give you a limited (normally between 6 to 15 months) interest free period if you transfer your debt from an existing card. It can be well worth your time to do this, but look out for catches such as fees per percentage of your balance, and limits. Current offers include the Halifax One Credit Card with 0% APR on balance transfers for 12 months.
0% Purchase balance transfer - normally this is offered in conjunction with a 0% balance transfer – but be careful as they are often offered for a lower length of time than the balance transfer, and it is more difficult to keep tabs on credit card spending. Good current offers include the egg credit card, the Halifax one credit card and the Sainsbury’s one credit card – all offering over 6 months interest free purchases.
Low interest rates – Where most 0% credit card offers increase their standard rates to high levels once the grace period is over, if you don’t want the hassle of switching regularly there are many credit cards that offer comparatively low interest rates permanently. Though these credit card interest rates are low compared to most typical APR (in the region of 10% compared to 16%) , they are much higher than some balance transfer offers and long term debt plans such as personal loans. Typical examples include Barclaycard Simplicity Credit card with 6.9% APR variable
Cash back and reward schemes – Paying the full balance of your credit card every month, the need for a low interest rate on balance transfers and the like is not so high. You will not pay interest per month unless you default on payment. If you are one of these responsible people, you would benefit a reward scheme. These vary from air miles to cash rewards to money to spend in partner shops. Though it may not sound a great deal, over the years, it adds up and is worth it if it requires no effort you your behalf or any changes in your spending pattern. Good examples of these schemes include the Air miles credit card, and the American Express Platinum Credit card which offers 3% cash back for the fist 3 months.
Lifetime Balance Transfers – if you want to take advantage of credit card companies need for your business, but are trying to pay off the balance, there are a number of credit card offers that offer extra low permanent interest rates, if you transfer your balance. These are often substantially lower rates that a standard low interest rate credit card.
Once you have negotiated the latest credit card offers and financial jargon, applying for a credit card is relatively simple. Most credit card companies offer online credit card application services, where you can be accepted or rejected in minutes, at any time of the day. Before going mad and applying to them all though, it is wise to understand what happens behind the scenes when you apply for a credit card.
To apply for a credit card, you will have to provide a great deal of personal details including addresses for the previous three years, salary and proofs of id. As well as this, a credit card application will include a report from a credit reference agency. This is a report that includes all details of your financial activity over the last 6 years including defaulted and late payments of all bills, county court injunctions and previous credit applications.
Finally, remember that whatever the current credit card offers are, it is always subject to approval and change. Though an advert may offer a credit card with a low APR, what you actually get will depend on your credit history. In the same way, once you have got your credit card, the low interest rate can be changed by the credit card company regularly, and this will be stipulated clearly in the small print.
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