Top Tips On How Not To Succumb To Plastic Fever

With the UK having the most competitive credit card market in the world after the US it is understandable that over 30m Britons have one or more credit cards. With almost 1,500 different credit cards to choose from the UK now has more credit cards then residents.

The market in the UK is now awash with over 75m credit cards and an estimated 23m store cards as British consumers attempt to satisfy their almost insatiable appetite for plastic credit.

2005 saw UK cardholders spend £124bn on credit cards, equating to an average of £5,000 per household. Currently we spend around £10bn a month on credit cards with overall credit card debt sitting at around £60bn.

Despite the nation appearing to be in the grip of ‘plastic fever’, following a few simple rules and being responsible with your credit card usage can save you having to pay unnecessary interest and charges thus leaving more cash in your pocket.

Avoid paying interest on outstanding balances

With almost three-quarters of UK credit card debt incurring interest and with average interest rates of a whopping 15.6%, taking advantage of 0% interest deals on offer could save you hundreds of pounds a year in interest payments. Despite most cards charging a one-off fee for balance transfers the amount saved over the deal period will more than compensate.

Visit our 0% balance transfer page for the latest 0% introductory offers

Use lifetime low interest rate cards for large balances

As many credit card issuers try to phase out 0% interest balance transfer deals, cards offering low interest rates for the lifetime of the card’s balance are becoming more common and competitive. With average interest rates of 5.9%, these types of credit cards may be a better option for those with balances that are unlikely to be paid off within twelve months. These deals allow a cardholder to repay their debt in a timescale convenient for them whilst avoiding having to pay interest rates of, on average, 15.9%.

Exploit loyalty cards

If you spend within your means and are therefore confident you can clear you credit card balance in full each month, then applying for a card that gives you cashback, for example, can pay dividends. Firstly set up a direct debit to clear your card balance in full each month (this means you avoid paying interest on your purchases) and then use your card for all your monthly purchases, such as the shopping for instance. In doing so you can earn around £100 per year in cashback. Free money!!

Visit our best buy credit cards for some great offers.

Don’t be part of the payment protection insurance rip-off

Payment protection insurance (PPI) is policy designed to cover you in case of sickness, unemployment and accidents. However as premiums can add 9% to 12% to the cost of maintaining your card, it’s best to avoid PPI like the plague. Many industry experts believe that PPI is overpriced and a rip-off, so avoid.

External Links:

Payment Protection Insurance tips from The Association of British Insurers
Q&A: Payment protection insurance - Article from the Guardian
Concern over protection insurance - more information from the BBC

This article is based on the writer’s own research and in no form constitutes financial advice. Readers should always conduct their own research into any financial option, based on their own specific circumstances.

Individual credit cards and their rates quoted are correct at time of writing, but may be withdrawn by the credit card company at any time. Always check with the company concerned for their current deal.