A guide to credit card deals and offers

If you need a helping hand with your finances, credit card deals could help - so what kind of benefits could you reap from these?

You may have come across various offers that are available on different cards, including introductory rates, zero per cent interest deals and cashback. If you've never used a card before, then opting for one with a zero per cent interest deal could be the way forward, especially if you are organised with how you make use of it.

With these cards, you do not have to pay interest on any new purchases for a set period of time - which can be up to as much as 15 months. Once this timeframe comes to an end, you will find you have to start paying interest - generally set at around 16 per cent, although rates do vary across products and providers.

These credit cards are particularly good if you find that you need some help with cash flow, or if you suddenly need to buy something but are keen to pay for it later on.

You could also opt for credit cards that offer you zero per cent on balance transfers, on top of purchases. This means that you will be able to transfer any existing debts to the credit card and not have to pay interest on the amount. If you do this, however, then you must make sure the zero per cent period on purchases is as long as that for balance transfers, or you could find you have to pay interest on purchases sooner than you think.

It is also important that you ensure you clear your credit card debt before the zero per cent period ends. The best way to do this is most likely to work out how much is needed to clear the amount before the timeframe is up and then set up a direct debit to make sure it gets paid each month.

Opting for a zero per cent balance transfer credit card could help you save an absolute fortune in interest rate payments, but there are a number of points you need to bear in mind before you sign any agreements with lenders.

The course of action you should take is double-checking the rate, as the one you see advertised may not be the one you are given. If you have had credit difficulties in the past, for example, then you may be offered a higher annual percentage rate.

You also need to find out what the introductory rate covers, as it might not apply to purchases and cash withdrawals, which may both have higher rates.

Furthermore, you might want to think again if you intend to use your balance transfer card for buying items, as it can be more expensive since purchases tend to be at a higher interest rate. You will also find you cannot pay off your most expensive debts until the balance you transferred on to the card has been settled.

When taking out pre-paid credit cards or other similar products, you will most likely come across introductory rates. Many lenders offer consumers interest-free periods on balance transfers for a set timeframe when they first take out their card, so debts can be moved over and zero per cent interest paid for a couple of months.

You need to be aware that some products will charge a fee for balance transfers, which tends to be between one and three per cent of the overall amount.

Introductory rates of zero per cent on purchases are also available and could last for between three and 12 months - ideal if you plan to make a big purchase. It is important that you look at the typical interest rate, however, as once the initial period ends you might find you are faced with a high rate of interest otherwise.

You should also consider taking out a credit card that offers you cashback - just one way that companies attract new customers in what has become a particularly competitive market.

Here, for every pound spent on the card, you will receive a percentage back. If you spend £100, for example, you may be given £1 in return, with the overall amount then returned to you at the end of the year.

These products are particularly good if you are certain you can pay your debt back each month and never have to pay any interest. These cards often have much higher rates of interest, so any money you earned would be wiped out.

You must also read the small print carefully, since some lenders cap the amount they will pay you back.

Pre-paid cards 

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2011-09-07 16:39:56 © Moneyextra.com