Avoid sinking into debt by switching credit cards

8 January 2008
It’s common to use a credit card to finance your Christmas spending, butif you don't have the right card you could end up racking up more debt. Get a better deal and you could drastically reduce the level of interest you pay.

Moving your current balance onto an interest free card will also give you breathing space to pay off your debt without accumulating more. However, if you do intend to keep spending make sure you opt for a card that also allows 0% on purchases.

Virgin MasterCard currently offers 0% on balance transfers for the first 15 months and 0% on purchases for the first three months. After this time the interest rate reverts to 15.9%.

Alternatively, Halifax MasterCard offers a 0% on balance transfers and purchases for 12 months. Its typical APR is 14.9%.

When considering a 0% balance transfer card be aware that you might be charged a fee for moving your debt. For example, Virgin’s MasterCard has a balance transfer fee of 2.98% while Halifax charges 3%.

If you do decide to move your debt onto a 0% credit card then remember to close down your old account and cut up any cards to stop you spending. Also, don’t put off paying off your debt by only making the minimum monthly repayments. There are only so many credit cards on the market so you cannot keep moving your debt indefinitely.

If you don’t have a balance to transfer then you could consider taking out a cashback credit card that offers financial incentives for purchases.

American Express Platinum Cashback card has an APR of 18.9% and offers an introductory 5% cashback on purchases up to £4,000 for three months. The standard cashback per year is 0.5% up to £35,000, 1% on spend between £3,501 and £10,000, and 1.5% on spend over £10,001.

Barclaycard also offers a Platinum Cashback card with an APR of 14.9% and 0% on balance transfers for 12 months. The card offers 0.5% standard cashback a year, with 2% cashback on supermarket spend and petrol.

Or Yorkshire Building Societiy offers a Classic Visa cashback card which has charges 0% interest for the first six months after which time it APR reverts to 15.4%. The card offers standard 1% cashback a year on spend between £1 and £2,000, and 0.5% on spend over £2,001. And if you have a mortgage with Yorkshire Building Society then the cashback will be paid into your mortgage account.

If you are just looking for an uncomplicated credit card look for one with a long-term low rate. The best standard rate card currently on the market is from Barclaycard. Its Simplicity Visa has a purchase APR of 6.8% or 15.8% if you withdraw cash on your card.

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