G Marwick

Are 0% Credit Cards reaching their end?

Are Credit Card companies starting to feel the pinch? We all know that the Credit Card companies make their money by charging us interest on the money we borrow. With all the 0% balance transfer offers that we have seen over the last few years its no wonder these companies are concerned they aren’t making any money. Many customers who take advantage of these offers move once the 0% period has expired.

These credit card companies are now using smart tactics to grab back a chunk of money that they have lost through these deals. One of the ways they are doing this is by reducing the interest free period, meaning you have less time to pay the balance off. If you don’t pay it off by the time your 0% period ends you are charged interest backdated to when you made the balance transfer.

If you do find yourself in this predicament and you decide to transfer the outstanding balance to another 0% credit card you will unfortunately now be charged a fee for making the transfer by the Credit Card Company you had the original offer with.

These are all tactics that are now being used to make sure the Credit Card Companies make some money off of you.

Here are some points that may help you to beat the new rules that are being implemented plus other ways to save on your Credit Card fees:

• The most obvious advice that can be given is to be disciplined and try to pay off the full balance off every month.
• If you fall in the remaining 85% of us that are not able to do this then you should opt for a Credit Card that has a low transfer rate which stays low no matter how long it take to pay off the balance.
• If you are in danger of exceeding your credit limit and being charged £25 then contact your Credit Card provider and get an increase on your limit. In most cases they will fall over themselves to do this. Once you are back on your feet get the amount reduced. Remember discipline!
• Whatever you do avoid withdrawing cash from your credit card. These services will cost you from 2% upwards of the amount drawn.
• Set up a direct debit. This will prevent you from ever being charged a late payment fee. Even if this is for the min balance due every month. This is one of the biggest money makers for Credit Card Companies.
• Don’t take out Credit Card protection. It’s not worth it and its over priced for what you get. This is a topic for another article. My advice, steer clear.
• Avoid using your Credit Card abroad. This is a sneaky way for charges to be implemented. The rate of exchange is not always the best and you get charged for the convenience of using your card in a foreign country.
• Don’t be fooled into applying for a Credit Card that offers cash back and loyalty points. While some may be good the majority expect you to spend large amounts before you even qualify for any significant cash back. The incentives may be high but then so is the APR.

We all need Credit Cards for day to day living to get by so advising on not having them is ridiculous. All we can say is be disciplined. Keep a close eye on your fees and charges and manage them very closely. Check you balance statement every month. Fraud is rife at the moment so don’t get caught out.

Article Tags: Credit Cards, Credit Card

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