Credit cards UK - brands, balance transfers and interest

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If the balance of the credit card you currently use is getting bigger and bigger each month, and the rate of interest that you are being charged is making it even more difficult for you to pay off the debt, it may be time to transfer to a new credit card brand. Surprisingly, very few people are taking advantage of interest-free introductory rates and special low interest rates on balance transfers. In fact it is estimated that British consumers could save a combined total of over £2 billion if we just transferred our 16% APR cards for cheaper rates of around 10% APR.

Transferring a balance to a lower interest credit card means that the money you pay back each month contributes more to reducing the balance that you owe. High interest rates simply gobble up your repayments, making it more difficult for cardholders to pay back the original debt.

There are certain things to bear in mind when applying for a new credit card. There are hundreds of different credit cards out there, but the following hints and tips should help you make the right choice, and more importantly, cost you less in the long-run.

Low introductory APR (annual percentage rate)

Basically, the lower the APR the less interest you pay. Many card providers offer low incentive rates, sometimes for a few months, sometimes for the life of the balance. Shop around for a deal that suits your circumstances best.

Low standard rates

When selecting your credit card, try not to let the introductory rate cloud your judgement. While you should always look for these special deals, remember that you will probably have to pay the standard rate eventually, so make sure this is also competitive. A rate of over 15% APR should be avoided, but the lower the better.

Annual fee

Always check whether there is an annual membership fee charged to cardholders. Don't reject a card just because you have to pay this, but make sure it offers enough benefits to justify this extra expense.

Charges

Many credit card providers supplement low rates by imposing high charges for late or missed payments, and for spending over and above a set credit limit. Check what these charges are before you get caught out.

Rewards

Many companies offer cardholders reward points and discounts on certain products, so make sure you qualify if this is something that you could benefit from.

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