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.

Customers will not only receive points on everything they buy, but they will be able to double their points when purchasing fuel or any AA products.

In may appeal to the 15 million members that the AA has who will be able to benefit from a 12 months interest free period.

With an APR of 16.9%, customers can redeem their points against AA insurance or products as well as shopping vouchers and cash back.

The motorist’s card, as the director of Financial Services at AA put it, believes that reward cards are of particular popularity at the moment. He said “The cost of motoring is constantly rising – not least the price of fuel and the new AA card offers the opportunity to help ease the financial pain of running a vehicle”.

The announcement was made to staff after just a day when RBS and Lloyds confirmed plans for £ 40 million worth of government money being ploughed into them.

This news comes on top of RBS confirming last week that they are going to be axing 3,700 branch staff and will see offices in Southampton, Southend, Leicester and Sheffield being affected.

Chief Executive of HSBC UK, Paul Thurston, said “This restructure is an essential part of the streamlining of our business and the migration of activities into centres of excellence around the country.”

Having already being labelled a “fundamental mistake” by union leaders, employees at the lower wage end of the scale are most likely to be affected. Rob MacGregor from Unite’s national office said “The union does not believe this will do anything to improve the company’s performance.”

This bad news will take HSBC job cuts total this year to 3,400. The bank did not have to take the government bailout but instead raised £ 12 billion from shareholders earlier this year.

MasterCard has said that it has now agreed to halve the fees charged for transactions, but that this was only a temporary measure pending a court appeal. Xavier Durieu, secretary general of retailer lobby EuroCommerce, said: “This temporary settlement sends an extremely negative message to everyone in Europe. This decision is appalling and we count on the Commission to win the court appeal.”

Retailers have been outraged by these fees, and according to reports have claimed that domestic and cross border payment card transaction fees in Europe are amounting to around £11 billion a year. EU Competition Commissioner Neelie Kroes said: “These fees are simply a hidden source of revenue for banks. MasterCard could not justify their level.”

MasterCard officials have said that the agreement to cut the fees on a temporary basis meant that the network could not invest in new products for consumers and retailers and could not sustain string competition within the payments industry in Europe. MasterCard Europe’s president, Javier Perez, said: “That is why these rates are only interim, and why we are pursuing our appeal in the European Court of First Instance.”

Neelie Kroes stated: “We will be monitoring implementation closely in coming months.” She added: “I have no intention that today’s announcement will allow Visa to benefit at the expense of MasterCard.”

In the past many people have switched their credit card debts onto a 0 percent balance transfer credit card, which has given them a long period of interest free credit within which to repay the transferred balance without being charged any interest on the debt. However, these cards usually charge a balance transfer fee of around 2-3 percent of the amount being transferred, and in some cases this can come to a lot of money, which may put people off from doing this.

Industry officials have recently said that a more suitable alternative for those that do not wish to have to pay these costly transfer fees would be the life of balance transfer credit card. In the same way as the 0 percent balance transfer card consumers can transfer their existing credit card balances on to these cards. They are then charged a very low rate of interest on the transferred balance for the life of the balance, as long as they ensure that they make at least the minimum monthly repayment required.

One credit cardholder recently stated: “I wanted to try and shift my debt from my existing cards, which charged a high rate of interest, to an interest free balance transfer card, but providers were asking for a large amount by way of transfer fees. I then decided to transfer to a life of balance transfer card, which saves me money in interest and gives me more time to clear the balance that I transferred.”

One of the measures that the government is bringing in is to stop credit card firms from automatically increasing customers’ credit limits. At present credit card providers review the accounts of customers periodically and then increase their limits accordingly, letting them know by post. However, whilst the customer may not have really wanted the credit limit increased once this is done the temptation is there to spend on the card, which puts the cardholder even deeper into debt. The government wants this practice to stop, and for credit limits to be increased only at the request of the cardholder.

Another thing that many credit card providers have been doing over recent years is sending out credit card cheques to customers, which can then be written like normal cheques. Customers can even write themselves a cheque and put it in their bank, with the amount then coming off their credit card. However, many do not realise that they are then charged high credit card fees for using the cheques. This is something else that the government wants to put an end to.

The Consumer Affairs Minister, Gareth Thomas, said: “We are concerned that people may be tempted to borrow irresponsibly if credit card companies increase borrowing limits without this being requested by customers, or send out unsolicited credit card cheques. It’s vital we protect consumers at this time and we are exploring these issues carefully.”

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.”

It is thought that the credit card details came from a criminal gang in the Far East, and the list was recently obtained by a leading UK national newspaper. Full details were apparently found on the list, and this included the names, full credit card account details, and home address details of around nineteen thousand British cardholders. This included holders of Visa credit cards, MasterCard credit cards, and American Express credit cards.

The list could easily be found, accessed, and copied via the Internet according to industry officials. However, the payment clearance agency in the UK stated recently that many of the cards on the list had already expired, and many others had been stopped. Despite these reassurances, however, many consumers were still very worried that their home addresses and names had been published, putting them at increased risk of becoming victims of identity theft.

It was pointed out that many of those affected by the list had not been warned of the breach in security, and Nigel Evans, Conservative MP who is also chairman of the All Party Group on Identity Fraud, said: ‘This is hugely worrying. The credit card companies have a duty of care to inform all those involved that they are at risk of identity fraud.’

The new scheme will allow the cardholders to get instant discounts at participating retailers without having to redeem points and vouchers, so consumers will be able to enjoy a hassle free way of getting their credit card rewards. Whilst the credit card giant handles payments for nearly ninety thousand retailers, it has not yet revealed how many of these will be taking part in the new rewards scheme.

Many industry officials have attacked other rewards based schemes because often the cardholder finds it too difficult, confusing, or time consuming to redeem their points, and they end up going to waste. However, the instant benefits that this new rewards scheme will provide means that this should not be an issue.

There are many other credit card providers that offer rewards based cards such as cash back cards, air miles cards, travel rewards cards, and a variety of others, but it has been revealed that an alarming number of people fail to redeem their rewards for one of a range of reasons, which means that they end up not benefiting from having a rewards based card at all. Industry officials have pointed out that rewards based cards are best suited to those that pay their balance off in full each month, as otherwise the interest charged can outweigh the value of any rewards received.

Equifax External Affairs Director, Neil Munroe said “A natural instinct when getting to the point of facing too much debt, especially on credit cards after the Christmas spending spree, is to cut them up”.  He adds “But whilst it’s important to stop using credit when you’re already struggling to manage repayments, we do advise that consumers don’t cut up all their cards.”

He continued “Obviously it’s important to try to get financial matters straight first. But once they have achieved this they may want to use credit in a responsible way to support their finances in the future. If they have had a record of debts and defaults then they will find that new applications may not be accepted, especially as lenders are now operating much tighter criteria when assessing new customer applications.”

“Indeed, in a recent survey* conducted amongst customers of our Credit Reports and Ratings, nearly a third of respondents said they had been refused credit in the last 6 -9 months. 26% thought the reason they were refused was because they had a poor credit rating with 10% saying they thought they didn’t fit the lending criteria. So our advice is to stop using credit cards and do everything possible to pay off outstanding balances. But don’t cut them all up.”

Getting credit from lenders is becoming ever more difficult in the current climate so the message from Equifax is stand up and tackle your financial woes and do not give up.

Mr Munroe warns though “Credit cards are a costly way to pay for essentials if the bill isn’t paid off in full at the end of each month, but we do acknowledge that having access to credit could be useful in the future and that’s why we are advising that consumers don’t cut up all their cards.”

“It’s also crucial not to forget any cards on which there are outstanding balances – any overdue payments will be shown on an individual’s credit file and will be taken into account by lenders when new applications are made. It’s worth consumers getting a copy of their latest credit report to make sure no cards are forgotten. To make this as easy as possible, we have launched a new service which gives them access to their Equifax Credit Report for 30 days for free.”