Credit cards can be beneficial

Credit cards are not all bad and can be very convenient if the balance is paid off in full each month, an expert told those looking for the best loan interest rates.

Justin Modray, from Candidmoney.com, said that credit cards can be an incredibly shrewd way of managing money if they are used to their full advantage.

"Paying by credit card can be a very convenient and cost effective way of paying for goods, provided you repay your balance in full each month. But if you start incurring interest the financial consequences can be painful, with most cards charging around 17 per cent APR," he said.

Mr Modray explained that only paying of the minimum payments on a £2,000 spend will mean consumers spend 15 years repaying debts and incur interest of around £1,500.

Meanwhile, Moneysavingexpert.com said that keeping a credit card without using it can have a negative effect on a credit rating, so it is best to regularly spend small amounts and then pay it off, even when it is not needed.

Moneyextra.com recommends you take independent financial advice before acting on any article

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2011-07-20 14:37:55 © Moneyextra.com