Don't fall for the tricks of the card trade

Banks and lenders may compete for your business, but they'll find ways to hit you hard if you go into the red. That's way it pays to read the fine print.

You may think competition among banks is good for consumers. After all, why else would we be offered low rates on loans, 0% credit cards and high-interest current accounts? But behind the cheap deals lie some expensive charges. Yes, the banks still have ways of making you pay.

Take those current accounts. Halifax's new high-interest account offering 5% interest has caused quite a stir. In general, this is a good deal. You get 5% interest on balances up to £2,500. But make sure you are paying £1,000 into the account every month, otherwise you will be downgraded to their less appealing standard account. And beware of their charges banks have to make their money somehow and Halifax charge a whopping £39 for bounced cheques or returned direct debits. Also, avoid going into the red; unauthorised overdraft rates are steep. But if you are a steady saver, this could be the account for you.

A 0% credit deal might not work out so cheap if you don't understand the tricks of the card trade, writes Clare Francis in The Sunday Times. You don't always pay the 0% rate for both balance transfers and purchases. As always, the answer is to shop around and read the fine print. Go for accounts and credit cards that suit your individual needs. As the competition between banks hots up, wise investors should be able to find good deals.

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