Five Questions About: Credit cards

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The Independent Online

Is it true credit card deals are getting better?

Yes, consumers are benefiting from renewed competition in the market, with the length of interest-free promotional periods at record highs. Barclaycard Platinum recently extended its balance transfer period from 15 to 16 months at 0 per cent for new customers, subject to a 2.9 per cent balance transfer fee. The Yorkshire and Clydesdale Banks' Gold Master Cards, the Natwest Platinum Credit Card and the Royal Bank of Scotland Platinum Credit Card also all offer an interest-free period of 16 months.

What about introductory offers on credit card purchases?

These are looking pretty good too. The average 0 per cent introductory period for purchases has now risen to an average of 12.2 months – the average three years ago was 10.8 months. The current best deal is the Tesco Clubcard Credit card, which is offering 0 per cent on purchases for 13 months.

This all sounds great – what's the catch?

The downside is that standard rates on credit cards are continuing to rise, so that once the promotional period comes to an end, the average rate is now 17.32 per cent. This means that if you aren't able to clear your debts during the introductory period, you'll be hit by steep interest charges until you've paid back what you owe.

Any other pitfalls?

I'm afraid so. Credit card providers are still very cautious about who they will lend money to, so the best credit card deals usually only go to those with impeccable credit histories. If you have missed a payment on a loan, mortgage or credit card in the past, then your application is likely to be refused.

Is there anything I can do to improve my credit history?

First and foremost, make sure you are registered on the Electoral Roll. You should always close any old credit card accounts, even if they show a zero balance, as lenders will take these into consideration when working out how much credit to give you. It's also worth checking any financial arrangements you hold with a friend or partner. If they have a particularly bad credit rating and you are associated with them, this can impact on your own credit history, so you may want to ensure that any credit agreements are in sole names.

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