Is it advisable to compare credit card rates?

Not only is it advisable to compare Credit card rates, it could be vital. As part of your overall personal finance planning, you will want to compare Credit card rates to cut down on the amount of interest that you are paying out on loans.

The average person has £3000 worth of debt on their Credit cards. If that Credit card happens to be a normal high street bank card at 18.9%, it is possible to transfer that balance to an Alliance & Leicester Credit card right now and even if you can't pay off that balance, you will save £363 in 1 year - definitely worthwhile to compare.

Think about what you could do with an extra £363 a year just by comparing Credit cards. For many people, that would be enough for a holiday, or a full year's car insurance, or maybe you could use it to help to pay off other Credit cards. Whatever you use it for, the fact that you could free up that sort of money simply by changing your Credit card is not to be sniffed at.

For some people, changing once can make a difference sufficient for their needs. But for others, it is quite possible that they can benefit from regularly comparing rates and changing. Some companies like Egg, Tesco and RBS Advanta release cards for which the balance transfer rate only lasts for 6 months or a year, in which case it could be extremely low (sometimes as low as 0%). Many customers will constantly change their account (sometimes called "churning"), and transfer their balance again and again, sometimes having to pay no interest on it for a few years. These people can end up saving thousands in this way, in which case you could say it is very advisable to comparison.

Add to that the fact that some companies will charge low interest rates for purchases as well as balance transfers for a limited period. The possibility for saving money is even higher in this case, particularly if you take the opportunity to "churn" and move from account to account that charges a low rate on both purchases and balance transfers.

Finally, there are those who may simply want to change once, and want to find an option with a low rate permanently. Obviously, this rate will be higher than the short-term deals on purchases and balance transfers. However, it could still mean that, given the example above of a £3000 balance transfer from an high-street bank at 18.9% to Cahoot (8%) there is a saving of £327 in a year.

So, yes, it is very advisable to look at different rates, as you will be able to save a healthy amount of money in interest, and perhaps spend it on more important matters.

© The Pink Fridge Online Magazine 2008 - Compare Credit Card Rates

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