Credit Crunch

Credit cards hit by credit crunch

In the last two months, credit card issuers have put up the cost of borrowing on credit cards over 120 times. These increases have included higher interest rates, bigger fees to use cards overseas and increases in balance transfer charges.

In the main, these increases have been very quietly introduced – no surprise there – but for those of us with credit cards, we’re seeing the impact of these price hikes more and more each month. The problem is that the credit card issuers leave themselves all sorts of room to add on charges and increase fees in the small print of the agreements, and how many of us ever read those? Even if we did, it’s unlikely that we’d choose not to take the card; we would never have any cards if we did.

So, what can we do to try to minimize the effect of these increases? Here are a few tips.

Try not to take cash out of your card: Doing so can incur an interest rate of around 25% which is applied as soon as you take the cash out. You will most likely also be charged a fee for withdrawing cash.

Pay more than the minimum amount: Even paying a little extra over and above the minimum payment can reduce the debt by thousands and reduce the time you’re repaying it.

Transfer your balances: If you are offered a card that allows you to transfer existing balances at 0%, do so, but be aware that in order to make the best of this, you may need to do this often – as soon as the 0% offer is over in fact.

Shop around: With so many lenders chasing fewer and fewer borrowers, there are some good deals to be had, even with the ever rising fees and interest rates, so shop around. Use price comparison websites to choose cards that have good initial offers as well as good long-term rates. Ideally, try to find fixed rate of interest deals.