The credit card companies are on the hunt for customers again. They practically shut up shop after the credit crunch. Deals disappeared from the market and lending criteria tightened to the point where up to 18,000 people's applications were being rejected per day in 2008. As a result, between 2008 and 2009, the number of credit cards in circulation dropped by more than a million.
But now not only are deals returning, we are seeing better ones than were on offer before the crunch. On top of this, the banks are reportedly easing their lending criteria again. So there is no reason to get stuck with a bad deal.
The best balance transfer deals
If you have built up some debts on a credit card then make the most of the current balance transfer offers. The average interest rate on a standard credit card was 17.32% in July. Whereas switch to a balance transfer deal and you won't pay any interest on your debt for up to 16 months. Admittedly, these deals aren't completely free - you'll pay around a 3% fee for transferring your debt to the new card - but that is a lot better than being clobbered for double-digit interest.
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The longest balance transfer deals currently available are on the Barclaycard Platinum, NatWest Platinum and Royal Bank of Scotland Platinum cards. All three are offering 0% on balance transfers for 16 months with a 2.9% balance transfer fee.
But beware - once the introductory period is over, the interest rates shoot up to 16.9%. So if you haven't managed to clear your debt during the 16 months, make sure you move to another 0% deal.
The top credit card for purchases
If you have some big purchases you need to make and you want to spread the cost, consider getting a credit card with an introductory offer of 0% interest on purchases. The best of the bunch is the Tesco Clubcard Credit Card - it offers 0% on purchases for 13 months. As with the balance transfer deals, make sure you have cleared your debt within the first 13 months, or be prepared to switch to another deal. After 13 months, the interest rate jumps to 16.9%.
The credit cards with the best rewards
If you don't have any credit card debt and pay off your balance in full every month, then get a card that rewards your good habits. There are three main options; cashback, airmiles or points. The American Express Platinum Cashback Card offers you cashback every time you use it. For the first three months you can earn 5% cashback up to a limit of £100. After that you can earn 0.5% cashback if you spend up to £3,500 a year, 1% on annual spending of between £3,501 and £7,500 and 1.25% on spending above £7,501 a year.
If you travel a lot then an air miles card may suit you better. With these you earn 'miles' as you spend which can be cashed in to reduce the cost of your flights. The Virgin Atlantic White Card gives you 3,000 Virgin air miles the first time you use it and then you earn one Flying Club mile for every £1 spent. Just bear in mind that you need at least 29,500 miles to go anywhere with Virgin so you'll need to spend quite a bit of money on the card to benefit. However, you can also use points to upgrade your cabin on flights you've already paid for.
The best overall reward card is the Tesco Clubcard Credit Card. This awards you Clubcard points whenever and wherever you use it. You earn one Clubcard point for every £4 you spend. If you use the card to pay for your shopping in Tesco you earn standard points on top of the credit card points. These can then be exchanged for money off your shopping, vouchers for a variety of things from restaurants to days out, or you can turn your points into airmiles.
Whatever credit card you choose, just don't build up an unmanageable amount of debt on it. Who knows when the economy might tank and the credit card firms will stop lending again, leaving you unable to get a new card when your 0% deal runs out. You don't want to be stuck with a debt you can't pay off that is accruing enormous amounts of interest.
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