| How many times have you taken out a credit card | | | | the same thing - you are charged a fee by your credit |
| based purely on its current interest rate or balance | | | | card company based on the amount transferred. |
| transfer option? | | | | The availability of true 0% balance transfers is |
| You may be surprised to note there are at least 7 | | | | disappearing and in all likely hood will completely |
| elements worthy of consideration when you take out | | | | disappear sometime soon. If a 0% balance transfer is |
| a new credit card. To judge a new credit card on just | | | | important to you take advantage soon, however be |
| one or two options could easily result in a bad deal for | | | | aware that many of these cards have higher |
| you. You need to consider the following 7 options | | | | subsequent interest rates. |
| when you take out a credit card: | | | | 5. The Availability Of Cashback |
| 1. The Initial Concessionary Interest Rate And Period | | | | Many cards now offer cashback on purchases. This is |
| Many credit cards offer a 0% interest rate on | | | | usually is between 1/2 and 1% of new purchases |
| purchases for a limited period, usually six to nine | | | | (excluding balance transfers and cash withdrawal). If |
| months. This option can be very attractive particularly | | | | you do not repay your account in full each month take |
| when you do not repay the balance in full each month. | | | | this into account when considering the interest rate |
| After the initial period the rate reverts to the standard | | | | chargeable. |
| rate, usually in the 10 to 16% range although this can be | | | | It is only where you repay the card in full each month |
| considerably higher. | | | | that this is a true cashback on purchases and if you |
| Some cards however have no interest free offer but | | | | do repay in full each month you may choose to make |
| have a much lower permanent rate, from about 6.9% | | | | this a priority. |
| (although it will vary in line with general interest rate | | | | 6. The Rewards And Discounts Offered With Your |
| charges). | | | | Credit Card |
| If you are likely to have a long term balance (if you are | | | | Rewards are where you can purchase goods or |
| unable to pay off the debt within the first 6 to 9 | | | | services at a discount by using your credit card, or you |
| months) this option could save you money in the | | | | have free insurance on purchases made using your |
| medium to long term. You will not be able to switch to | | | | credit card. |
| this rate if you have taken the 0% initial rate offer. | | | | In the credit card business nothing is free. If there are |
| 2. A Monthly Interest Free Period On New Purchases | | | | rewards offered the cost will be built in somewhere |
| This relates to the period between your purchase of | | | | (usually a higher interest charge) so compare with |
| an item and when you will be charged interest on that | | | | other cards not offering the same rewards. |
| purchase amount. Many cards have a policy of only | | | | 7. Credit Card Payment Insurance |
| charging from the payment date after the item | | | | Whether you take this option or not most cards now |
| appears on your card statement. | | | | offer some sort of payment protection insurance in |
| The effect of this is to give you between | | | | the event of sickness and disability. In the past this |
| approximately 25 days and 56 days interest free | | | | cover was limited to paying the minimum monthly |
| credit on all purchases. Clearing your balance within this | | | | payment however many cards now pay 10% of the |
| period will result in no interest being charged. | | | | balance on the card at the time your claim |
| Some cards will charge interest immediately from the | | | | commences and may be worth considering. |
| date of purchase and are therefore not suitable if you | | | | Be very careful with this insurance as it will exclude |
| clear your balance each month. | | | | any condition you suffer from when the cover |
| 3. The Annual Fee | | | | commences and similarly any redundancy announced |
| Many cards have now implemented an annual fee. | | | | before the cover commences. |
| This fee is chargeable whether you clear the debt | | | | Taking out a new credit card is more complex than it |
| each month or if you roll over your debt. | | | | seems at first. As you can see when considering a |
| 4. 0% Balance Transfers | | | | new credit card there are a number of aspects which |
| When taking out a new credit card you will normally | | | | must be taken into account and t can be very difficult |
| have the option of transferring any outstanding | | | | choosing a new card. |
| balance to your new card with no interest charged for | | | | There are many comparison services available that |
| a specified period. | | | | can help you cut through the confusion and I suggest |
| Although marketed as a "0% balance transfer" many | | | | you consult one or more before making your decision. |
| are not totally free of charge. An increasing number | | | | In all cases prioritise your requirements and only apply |
| now charge a one off charge of 2-3% of the amount | | | | for the credit card which best matches your |
| transferred as an "administration charge" for handling | | | | circumstances. Don't just pick the card with the longest |
| the transfer. | | | | balance transfer period or lowest interest rate as it |
| This is legally not an interest charge but it amounts to | | | | may cost more in the longer term. |