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.”

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.

The Easy Shop Card, which is linked to Argos, has been condemed by MP’s and debt experts alike as ” wicked ” and is something that they have been warning people to stay away from. 

As has been revealed by Argos sales this year compared with last are down 9% so a way of getting those figures back up they believe that the Easy Card will help during this vital period.  An example of how the product would work would be is you looked at spending £ 100.00 using this new product.  To repay this over a 27 week period would mean the consumer would be paying back interest of £ 35.00 on top of the £ 100.00 which in itself equates to an APR of 227.  This new product has been produced in association with Provident Financial.

The Liberal Democrat Shadow Chancellor Vince Cable MP says “A lot of people are finding it increasingly difficult to borrow from the mainstream high street banks.”

“Many may well feel they have to fall back on things like this. There is a real risk of a very large number of people being exploited as a result.”

He continues “In my view it is wicked to be promoting such high interest cards and loans at Christmas, when people feel under pressure.”

He is not the only person to have a similar view on the new product, Louise Bond from uSwitch said “Despite the recession, life does have to go on but we strongly advise people not to be lured into this type of deal.”

“It may seem like a quick fix but will cost you dear in the long run.”

She added “Despite being attached to a well known high street brand, people shouldn’t be fooled into thinking this is anything other than a sub-prime loan.”

And from the other side the company Provident Financial push the product as a simple way to borrow and spend and the product is advertised on their website as “We have teamed up with high street retailer Argos to give you a great way to shop  -  the Easy Shop card; a plastic card that lets you shop at Argos, without the worry of overspending.”

The word from Argos is “By law, home creditors must advertise their lending rates as an annual percentage rate.”

“Home credit companies have suggested for some time now that APR can be misleading because their loans are repaid over a short time period.”

Provident said “Our charging structure is fundamentally different to that of other lenders.”

“Provident home credit has a single, up-front, fixed charge that customers see from the start, which includes interest on the loan, the cost of the agent’s weekly visit to the customer’s home and the fact that the total amount to repay will never go up  -  even if payments are missed.”

Recent additions :

• Declined Applications For Financial Products
• Different Types of Credit Cards
• Cash Withdrawls In the UK

The last three years has saw figures rise to a staggering 41% compared to 21% back in 2005.  Back in 2005, Nationwide were the cheapest cash withdrawl provider with a rate of 16.9%, but those days are long gone and the Nationwide now join the other providers to date but upping the rate by 85% which today would see 31.2%.  The Nationwide do have the best method for customers to repay this amount back by making sure that the cash withdrawls being the first thing that is paid off on the individuals account which.  Other providers make their customers pay off the whole amount.  Another example of this would be Lloyds TSB who in the last three years has gone from 19.9% to todays rate of 31.91%.

Personal Finance Manager at U Switch, Louise Bond, says “People who use a credit card to withdraw cash may already be struggling under the burden of debt and are forced to resort to this method of borrowing to make ends meet. They can ill afford to pay the exorbitant rates of interest that most lenders are now charging them. While we accept that credit card providers have to make money, and that cash withdrawals carry a higher risk of people getting into bad debt, it is indefensible for companies to penalise their most vulnerable customers.”

“With some providers now charging up to the APR equivalent of almost 32% on cash withdrawals, equivalent to some sub-prime credit card rates, cash rates have become sub-prime rates masquerading as mainstream lending. We now challenge the OFT to investigate whether these rates amount to ‘usury’ or extortionate lending.”

“While the DTI may have intended to simplify things for consumers when they came up with these changes, they have actually caused more confusion. The reality is that most people who use this facility are either unaware of the actual costs incurred, or are so desperate to get their hands on the cash that they don’t care how much it will cost them.”

Recent additions :

• Searching for a Suitable Credit Card
• The Credit Fraudsters
• Should You Switch Your Credit Card?

It is therefore important that you think carefully with regards to switching your credit card. There is little point switching cards if you are not going to benefit from the switch, so don’t just apply for another card simply for the sake of it. Do your research and see whether you could make any savings or get a much more competitive rate before you take the plunge. You can check out the different types of credit cards and the rates and fees charged by using the Internet, and this will make it easier to determine whether there is any point in you switching credit cards.

If you are paying a balance off on one or more high interest credit cards then you may find that switching to a 0% balance transfer card or a low rate life of balance transfer card may prove useful, as you can then transfer your combined balances onto the balance transfer card and save some money on interest. If you have a credit card that you pay off in full each month but which offers nothing in the way of benefits then you could ditch that card and go for a rewards based card where you can earn something back from the credit card company.

The matter over whether or not to switch credit card will really depend your needs, circumstances, spending and repayment habits, and what sort of deal you currently have with your credit card. The object of the switch is obviously to save money, or in cases where you are not charged interest, such as if you repay your balance in full each month, to enjoy greater benefits from your credit card. If you have very bad credit then there is a very strong chance that you will not be accepted for another credit card, and you should avoid making haphazard applications because your credit can be further damaged through rejections.

If you are looking to switch your credit card then you should make sure that you research the market and compare a range of cards that will suit your needs. Avoid the temptation to simply take on another card, and then use both the new and the old card, as the point of the process is to replace your existing card with a different, more suitable card and not to add to your existing card with an additional credit card.

Recent Additions :

• The Balance Transfer Battleground
• Visa to Launch the Green Credit Card
• Barclaycards Planning to Change