Head of banking at moneysupermarket.com, Kevin Mountford, said “Christmas is always a difficult time of year financially and the current economic climate is not making things any easier. Preparation is the key during the festive season and consumers who have saved will be able to start the New Year without the burden of Christmas debt hanging over them”.

Those who have decided to go down the credit card route should be using their head when deciding about how to go about this, with Mr Mountford adding that for those people looking at using a credit card a deal with 0% interest on purchases would be the best option.

He added “Provided you are able to pay off the balance in full within the zero per cent period, these cards are a good way of spreading the cost of Christmas”, pointing out that consumers should not be spreading the payments to after the 0% interest period as they could still be paying the credit card off the next time Christmas comes around.

Are You Using Your Credit Card For Christmas This Year? is a post from: Credit Cards Bureau

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The two banks that are said to have pushed up their credit card interest rates recently are Halifax and Bank of Scotland. Officials have expressed concern that whilst the Bank of England has been slashing the base interest rate over the past six months, bringing it down to an all time low of just 0.5 percent, some credit card firms have continued to hike up their interest rates dramatically.

The two groups are owned by HBOS, which has now been taken over by Lloyds TSB. The provider has said that the rate rises are between 1 and 4 percent. However, some of the credit card customers have received letters stating that their card interest rate is being increased by 5 percent. Some customers have even seen their rates increased by more than this amount. The card provider has said, however, that the move is part of a ‘continual review of rates’.

An official from HBOS said: “The changes will affect a small number of our card holders and will be according to each customer’s personal circumstances. The average increase is between 1% and 4% which is inside [government] guidelines and reflects what is happening across the credit card market.”

Credit Card Rates Hiked By Two Major Providers is a post from: Credit Cards Bureau

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Recent research done by the Abbey has shown that as many as 3 million people will be joining in on the credit card changeover.  According to the Abbey it has become quite a regular occurrence at this time of year with many people of the UK trying to re-arrange their finances for the year ahead. 

The average amount that will be transferred is thought to be around the £ 2000.00 region and it is thought that this is most likely to happen in the first three months of 2009.

Abbey’s Head of Credit Cards advised “The New Year is an ideal time for people to review their finances. By transferring a credit card balance to a card with a 0% introductory offer, consumers can ensure they are managing their finances as effectively as possible.”

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The average spend per person at this time of year is £ 604.00 but with the interest that is charged by these types of cards it could be raised by £ 312.00 to mean that the amount paid back is more like £ 1000.00.

It is thought that around 16 million people will pay 47% interest more on store cards than they would with a credit card which, as uSwitch.com advised, is an average of 8% more than what the rate of interest is on a credit card.

Another method of getting money at this time of year is through withdrawing cash from credit cards and it is thought that this will be the funding for around 1.7 million people.  The only problem that this has that it will incur an interest rate of, on average, 29.97% which in turn again takes the amount you have taken out up considerably.

The overall recommendation that uSwitch.com advises is that the consumer should take a credit card over a store card but to also compare credit cards so that you get the best deal to suit aswell as be paying back more than what the minimum payment is back.

uSwitch.com, Personal Finance Expert Louise Bond says “There are tough times ahead in 2009 as consumers begin to feel the full impact of recession.”

“In light of this, Christmas 2008 will undoubtedly be on a tight budget. uSwitch.com urges shoppers to ensure that whilst being mindful of the amount they spend, the way in which they spend it deserves equal discipline.”

“The worst thing to do is rack up debt on ‘easy’ credit which carries an extortionate APR. There are a number of competitive 0 per cent credit card offers in the market and consumers need to shop around for the best deals.”

“People must be able to repay the debt accrued over the Christmas period in the most economical way possible.”

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UK payments association APACS advise that come 497 millions purchases were made with debit cards which was an increase from the previous month of 12.7%.  Similarly with credit card purchases the increase was around 9.4% up on the previous month.

A reason for this could have been the tax rebate that people saw in their pay packets which saw people recieving around £60.00 extra.  Taxpayers of the basic rate will be saving annually £ 120.00 which was brought about by the 10p tax row.

In the UK there are some 42 million people who have debit cards, along with 31 million who have credit cards.  In the three months leading up to the end of September the amount of spending on these cards was 7.3% up on the same period last year.   

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Along with this another twelve cards have put up the interest on cash advances sometimes being an additional 5% interest added onto what is already an expensive way of getting cash.

11 balance transfer cards are also being changed by some providers where the transfer fee has gone up or there has been a reduction in the amount of time you have the 0% balance transfer period for.

Moneyfacts have noticed that in the last three months the average interest rate has risen from 16.8% to 17.2%.  Analyst for the group, Michelle Slade says “During the past year, card companies have continued to increase the charges on their cards and consumers will find they will be stung more severely than ever before.”

“Just like on mortgages, card companies are factoring in a much bigger margin for the risk of consumers defaulting, so rates are going up rather than down.”

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Rewards credit cards:  Amongst the different rewards that are available from credit card companies on these cards are discounts at various retailers, travel rewards, air miles, loyalty or rewards points that can be redeemed for various goods, and more. These are suited to those that spend on their credit cards regularly and repay their balance in full each month.

0% purchase cards: These cards allow cardholders to use the card to make purchases in the normal way but to enjoy a period of interest free credit within which to repay the debt in order to avoid paying any interest at all.

0% balance transfer cards: The way in which these cards work is by enabling you to transfer the balance from other, high interest credit cards onto your new 0% balance transfer credit card. Once the transfer has been made you have a specified 0% interest period within which to clear the outstanding transferred balance before you start getting charged interest. The length of the 0% period can vary from one provider and credit card to another.

Life of balance transfer cards: With the life of balance transfer credit card you transfer your existing higher interest credit card balances in the same way as you would with a 0% balance transfer card, which means that you can transfer debts up to the credit limit in your new card. You will then be charged a very low rate of interest for the life of the transferred balance providing you make at least the minimum repayment each month.

Charity credit cards: For every pound you spend on your credit card the provider will donate a certain amount to the sponsored charity. You can choose from all sorts of charities from cancer support and research charities to animal charities and wildlife preservation.

Credit cards for those with poor credit: There are a couple of main providers that offer credit cards to those with damaged credit, and these are Capital One and Vanquis. You should bear in mind that you will need to meet the lender’s eligibility criteria, and if you are successful the interest rate charged is likely to be very high based on how bad your credit rating is, whilst the borrowing levels are likely to be low in order to stop you from falling into spiralling debt levels.

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With the evolving world of credit cards it is possible to get a card that suits your needs and your circumstances perfectly, and it is important to make sure that you do get the right card to suit your needs, as this can make a big difference to the benefits and the affordability of a credit card. In order to do this you need to look at what the card offers as well as what your spending and repayment habits are like, so that you can match the right card up to your needs.

For example, if you want to use your credit card to make a big purchase and you are looking to spread the repayments then you may find that the most suitable card for your needs is a 0% purchase credit card, as this means that as long as you repay the balance within the lengthy interest free period offered you will not be charged any interest at all. Your spending and repayments habits will play a big part in which card you choose for your needs.

The best method of finding the most suitable credit card is using the Internet, as this will enable you to browse and compare different credit cards from a wide range of providers, so you can look forward to an excellent choice of cards and providers. You can also look the benefits of different cards with ease when you use the Internet, so you will be able to determine which cards sound best suited to your needs and circumstances. You will be able to browse and compare credit cards from the comfort and privacy of your own home and at a time to suit you, and you can even make your applications online and receive an instant decision from the card provider.

You should always make sure that you take your time in looking at the benefits of different credit cards, as otherwise you could end up with a card that is totally unsuited to your needs and results in you paying over the odds. You can choose from many different credit card types, such as rewards base cards, balance transfers cards, 0% purchase cards, charity credit cards, low rate credit cards, cash back credit cards, and more.

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