OFT credit card ruling; a winner for consumers?

This April will mark a year since the Office of Fair Trading (OFT) forced providers to reduce their fines for late or missing payments from £20 plus to £12. Since then credit card companies have been sneakily introducing new credit card fees and increases to rates in a bid to recoup around £1bn in lost revenues. "It's important to review your credit card regularly to ensure youre getting the best deal," says Lisa Taylor, of financial data compiler Moneyfacts. "When your provider sends through revised terms and conditions take time to read the changes, as there is every chance your credit is costing you more."

Balance transfer; the end of an era

Balance transfer offers are not as attractive as they once were. Many of the longest interest-free deals charge a fee of around 3% of the amount transferred, which adds up to around £55.77 on the average credit card debt of £1,859. Most fees on the market are uncapped. The longest 0% balance transfer offer at 15 months comes from Virgin Money, with a 2.98% transfer fee. Egg (with a 3% fee) is interest-free on transfers until April 1, 2009.

0% Balance Transfer Cards

Other tricks

But there are some less well-known tricks that consumers would do well to have up their sleeves when it comes to how to play the plastic in their wallets. Moneyextra investigates.

Minimum repayments: People who make only the minimum repayment each month are card companies' favourite customers. Providers know they will have that customer for years and take a big chunk of the repayment in interest. But paying off 1% above the minimum monthly repayment could carve 13.5 years off the time it takes to repay a £3,200 debt. "Minimum repayment amounts have been falling and while this makes monthly repayments more affordable, keeping to these low repayments could see you facing a lifetime of debt," warns Ms Taylor. "In fact, you could find yourself not even covering the interest cost each month, let alone repaying any of the debt." Ms Taylor adds that the best way to manage card debt is to pay as much as you can afford, while setting up a regular standing order can provide some discipline and structure to your repayment plan.

Compare your existing credit card with the best on the market see what you could save!

18 January 2008 © Moneyextra.com

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