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Making The Most Of Credit Card Introductory Offers

Jan 9, 2008
The UK credit card market is ludicrously competitive - sometimes it seems that some of the biggest lenders would even be prepared to offer you their own grandmothers just to get you to sign up. By enticing you in with incredible credit card introductory offers they hope to reap the rewards from your interest payments. However, when used wisely, credit cards - and in particular introductory offers like 0% balance transfers and 0% interest on purchases, as well as retail and travel discounts, could effectively mean that, not only can shop for free, sometimes you can even actively reduce your current spending.

Even limited research on credit cards will enable you to discover that they are one of the most expensive forms of debt, far more expensive than a personal loan, for example, and if you choose to pay only the minimum amount every month you could be paying a great deal of money to borrow a small amount. However, it is possible to use credit card introductory offers to your advantage, although the process of "credit card offsetting" has become more difficult in recent years as lenders get wise to serial card applicants. The good news is that you don't need to be a financial whiz kid to save money with your credit card - the following tips can help you get the best out of credit card introductory offers.

Firstly, beware of 0% balance transfers! Banks and other lenders have got wise to "credit card tarts" that continually swap between balance transfer offers; some lenders will charge a transfer fee. Others may even refuse your card application if you have taken advantage of their 0% credit card introductory offer in the past. Swapping cards too frequently to take advantage of 0% on balance transfers could even affect your credit rating as lenders are able to assess the number of credit searches against your name.

Many credit card introductory offers also include 0% on any purchases for a limited duration. Barclaycard Premium for example offers 3 months at 0% while others like MBNA Platinum fix the period on a specific date (in their case 0% on purchases until March 2008). However, it's worth finding out if the card you're interested in offers 0% on cash back. If not then you need to be aware that while it's convenient, it's not the same as using a cash point - every time you get cash back on your credit card you are borrowing money and will therefore be liable for interest on the cash. If your card doesn't offer 0% on cash back then it makes far more sense to use your debit card to withdraw cash.

That leads on to the third area to be aware of when assessing the relative merits of credit card introductory offers. Most cards offer additional rewards on top of the standard 0% on balance transfers and 0% on purchases. Some of these are designed to appeal to your lifestyle choices while others are aimed squarely at your pocket. The MBNA WWF card, for example, makes a donation to the WWF for every card so you can feel good about the money you're spending (although it's worth considering whether a straightforward donation might be a more cost effective gesture) while the Virgin Credit Card offers discounts on purchases through Virgin Megastore and Virgin Holidays - ideal if you're planning an expensive holiday or make large regular purchases of CDs or DVDs.

Finally, the bottom line for most people should be the APR - that's the amount of interest you have to pay on the money you borrow. Rates are currently around 15% but some cards such as the Capital One Platinum card are offering rates as low as 9.9%. Whichever card you use the biggest money saving advice is: pay off your outstanding balance every month. By following this simple strategy you'll take advantage of the juicy incentives offered by lenders without having to pay them a penny.
About the Author
Jon Robson, a freelance writer with an inquisitive outlook on personal finance - in particular the uk credit industry - suggests that before you next use your credit card you should check the interest rates from at least one other competitive uk credit card company.
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