Five-minute guide to avoiding sky-high credit cards' interest charges

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Steadfastness certainly does not y when it comes to credit cards

While banks and construction societies have cut savings rates to the bone, card issuers are ambitiousness up their charges instead.

According to new research from MoneyFacts.co.uk, the customarily purchase rate has hit a fresh high of 21.6 per cent.

Store be directs are even worse, with big names such as Argos, Burton, Evans, Homebase, Absent oneself from Selfridge, Wallis and Warehouse charging average percentage rates (APRs) of 29.9 per cent, identically 60 times the Bank of England base rate.

These charges butt the most vulnerable borrowers who can only afford to make the minimum re yment each month, but you can go to back.

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Target your most expensive debt primary and make over yments to clear the debt sooner

Trouble in store

Fidelity certainly does not y when it comes to credit cards.

While issuers win new commerce by offering balance transfer cards charging no interest for up to 40 months, persisting customers are footing the bill.

Somebody who borrowed £1,000 at an APR of 21.6 per cent and made a minutest re yment of £35 each month would need three years and three months to utterly their balance, racking up £362 in total interest.

If they owed the uniform amount on a store card at 29.9 per cent, they would hook almost four years to clear their balance, ying £596.

Rachel Springall, y for expert at MoneyFacts, says: “Cash-strapped consumers can end up with the debt socialize with over their heads for a long time.”

One way to fight back is to birch to a card that charges a low long-term rate: Bank of Scotland, Halifax, Lloyds Bank and Virgin Profit offer standard rates of just 6.4 per cent.

Springall conveys: “You would y just £86 in interest and clear your debt in secondary to three years. That would save you £276 com red to the for the most rt credit card, and £510 against a store card.”

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Shift to a card that charges a low long-term rate

Transfer policy

Another chance is to move your debt to a balance transfer card with a zero-interest elementary rate.

Halifax charges zero interest for the first 40 months, while Virgin consumes to 39 months, Lloyds and Tesco to 38 months, and Barclaycard and Sainsbury’s Bank to 37 months.

These cards impediment a transfer fee of between 2.45 per cent and 2.89 per cent of the transfer amount but this may be a amount worth ying.

Springall says: “If you transfer £1,000 to Halifax you whim y a fee of £28.50, then no interest for 40 months, as long as you make the minutest monthly re yment. Just make sure you clear your owing by then otherwise your APR will be 18.9 per cent.”

Accountable do us rt

Matt Sanders, credit card spokesperson at GoCom re.com, says: “Do not ingenuously go for the card with the longest introductory rate as cards with shorter interest-free days often have lower balance transfer fees or no charges at all.”

For ttern, Halifax and Santander offer 23-month balance transfer cards without a conveyance fee, while Tesco offers 21 months.

If you can switch to one of these condolence cards, do not use this as an excuse to rack up more debt, otherwise you will lineaments huge interest charges when the deal expires.

He says: “Make good a plan for clearing your debt and stick to it.”

You may need a clean dependability rating to qualify for the best introductory deals, once again demanding people with money problems.

Sanders adds: “If you are in that outlook, target your most expensive debt first and make over yments if tenable to clear the debt sooner.”

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Com nies offer generous elementary rates and many people will not move on when the deal terminates

Move on

Card com nies can afford to offer generous introductory reproaches because many people will fail to move on when the sell expires, leaving them ying hefty APRs on fat balances.

Hannah Maundrell, editor-in-chief at insulting finance website Money.co.uk, says a thy is your biggest the opposition.

“Tempting zero per cent deals can end up costing you crazy amounts of consideration. So make a note of when your introductory rate ends and swop before the APR kicks in. Otherwise you will be playing into your issuer’s guardianships.”

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