Balance transfer credit card or consolidation loan?
For the many people that have credit cards with outstanding debts on them it can be difficult to determine who best to speed up debt repayment or reduce the amount being paid. High interest credit cards can end up costing consumers a fortune, and this is why so many people with credit card debt are keen to clear the debt as quickly as possible and get back on track in terms of their finances.
Trying to pay off high interest credit cards can be difficult at the best of times, but in the current financial climate many are desperate to try and rid themselves of costly debt and look at lower rate options. There are a couple of options available to those that want to reduce the amount that they are paying out on their credit card debts each month, and these options can be very effective if used in the right circumstances.
One of the options available to those that have debt on high interest credit cards is to opt for a 0 percent balance transfer credit card. If you only have one or two cards with modest levels of debt then you could find that this is the best solution. By transferring the debt onto a 0 percent balance transfer card you can enjoy a generous period of interest free credit within which to clear the transferred debt, and this can help you to save a small fortune on the cost of your credit card borrowing.
On the other hand you may have a range of debts that you want to deal with, such as credit cards, overdrafts, store cards, and loans. Of course, you couldn’t use a balance transfer card for all of these. However, you could look at using a consolidation loan, which you could use to wrap up all of this credit. This way you can get rid of the need to deal with a range of different creditors and you can make just one repayment each month on a lower rate consolidation loan, potentially saving yourself both time and money.
Whether you opt for the credit card or the consolidation loan it is vital that you compare the different deals that are available on the market from a range of lenders. This will help to ensure that you get the best deal possible and will enable you to reduce your repayments as much as possible.
Direct debits can help minimise risk of missed card payments
There are many people across the UK who are hit with one fee after another when it comes to their credit cards because they often miss repayments or make late payments on their balances. It is all too easy to miss a repayment on a credit card or even to pay less than the required minimum amount without realising and then being hit with hefty fees.
However, consumers can avoid this problem by setting up a direct debit so that your credit card repayments are made automatically. This provides consumers with a simple, convenient way to make repayments on their credit cards and cuts out the risk of missing repayments or making payments that do not meet the minimum requirement, both of which could result in fees being applied to the account.
Research was carried out by the comparison service Confused.com showing that consumers are wasting around £150 million a year between them on paying charges and fees that could easily be avoided. The research showed that around 57.5 percent of consumers do not have a direct debit set up for the repayments on their credit cards, which puts them at increased risk of missing a payment or making a late payment, which can then result in charges being applied to the account.
An official from the site said: “Setting up a direct debit to make a minimum payment on a credit card is such a simple thing to do, yet well over half of credit card holders haven’t done it. Collectively we are wasting millions of pounds each year on these charges. As well as late payment charges, many credit card holders are likely to have lost out on attractive low interest introductory deals or rewards as well, as these deals are often withdrawn if minimum payments aren’t met. Missing minimum payments can also adversely affect customer’s credit profiles, which may be detrimental when they want to borrow in the future.”
More figures over card fraud released
Card fraud is something that has become increasingly prevalent in the UK, and something that most credit and even debit card users have become increasingly concerned about in the current climate. Whilst there are many different measures that have been put into place to try and reduce card fraud the fraudsters themselves are also using increasingly sophisticated methods to commit their crimes.
Figures have recently been released showing that around fifteen million people in Britain, which equates to around one third of consumers, have been hit by credit card fraud in the past five years. This reflects a significant increase compared to 2009, when the figure stood at 27 percent. The figures also showed that a greater proportion of Brits had fallen victim to card fraud than in any other major country apart from China.
However, the data also showed that the level of satisfaction amongst Brits that had fallen victim to this crime was higher than in other countries. Around 40 percent of consumers that had fallen victim to fraud in the UK said that they had been happy with the service that they received from the bank that was handling the problems because of the speed at which they received their money back.
Figures were released by ACI Worldwide, and an official from the form said: ‘Fraud is constantly changing and, looking forward, the industry will need to increase focus on identifying identity theft and assisting victims to maintain this improvement in customer experience.’
However, the UK Cards Association stated: ‘The most recent card fraud figures for the UK, which are based on actual losses and not on research, show that card fraud is falling – a 28% fall in 2009 and a further 20% fall in the first half of last year.’
Check your card exchange rate before you head abroad
At this time of year many people may be looking at booking a holiday up for the Easter break, and some may be looking into getting a credit card to take along on holiday to fund their spending. Taking a credit card along can be a good idea, as it saves on the hassle of taking cash and traveller’s cheques, and provides increased convenience.
However, it is important t remember that foreign exchange fees are charged on credit cards, and this means that you will end up paying over the odds on the items that you purchase whilst you are abroad. A recent report showed how one credit card provider, Tesco, had been sneakily charging its customers higher foreign exchange fees than the standard Visa and MasterCard ones, which left customers out of pocket.
Whilst Tesco has now agreed to lower the exchange rate to fall into line with other card providers, many have already paid more than they needed to. This is a valuable lesson for those that do not tend to check the finer details with any credit agreement that they sign up to. Anyone that is thinking of getting a credit card to take abroad on holiday with them should make sure that they compare different credit cards and look at details such as the exchange rate before making a decision.
There are also other factors that you need to look at and compare when looking for a credit card to use abroad. You should compare the APR on the card unless you plan to repay the balance in full within the interest free period. If you are planning to get a 0 percent purchase credit card in order to pay for your holiday then you should look at the length of the interest free period so you know how much time you have to repay the balance before the interest starts to kick in.
Comparing different credit cards, and making sure that you look at the smaller print and check the fees, means that you could save a fair amount of money on the cost of your borrowing. If you are heading abroad with an existing credit card that you have it is still worth contacting the provider and double checking the foreign transaction fees, as these may have changed since you last used the card abroad.
Tesco bows to pressure over credit card charges
Supermarket giant Tesco was slated recently after it was discovered during a newspaper investigation that it was charging its credit card customers way over the odds when it came to foreign transaction fees. Many Tesco credit card users who were using their credit cards abroad were being charged much higher fees because of the way in which the supermarket giant was operating its exchange rates.
According to reports the company had sneakily started using its own exchange rate for these charges, and this was considerably higher than the standard charges that were being used by rival credit card providers, which are the standard Visa and MasterCard rates. The investigation was conducted and published by the Guardian, and it is thought that the company may have been raking in an extra £12 million a year as a result of the higher charges.
However, Tesco has now buckled under pressure and has announced that it is bring down its exchange rates to be in line with other credit cards. It said that it was making the move “in response to customer feedback and to improve transparency.” The investigation was carried out after a credit card customer with Tesco contacted the Guardian because his trip abroad had cost far more than he had expected it to.
Tesco made a statement stating that its credit card “has always offered great value to our customers when shopping in the UK and when travelling overseas.” It added: “In response to customer feedback and to improve transparency, we are now pledging to align our foreign exchange rate with the central industry rates. Implementation of the change is underway, and the rate alignment will be in place for all cardholders in February.”