Making The Most Of Credit Card Introductory Offers
Even limited research on credit cards will enable you to discover that they are one of the most expensive forms of debt, far more expensive than a personal loan, for example, and if you choose to pay only the minimum amount every month you could be paying a great deal of money to borrow a small amount. However, it is possible to use credit card introductory offers to your advantage, although the process of “credit card offsetting” has become more difficult in recent years as lenders get wise to serial card applicants. The good news is that you don’t need to be a financial whiz kid to save money with your credit card - the following tips can help you get the best out of credit card introductory offers.
While credit agencies may advise that credit card lending is the most expensive form of debt, crafty consumers who manage their spending on credit cards with care and restraint can use great credit card introductory deals to their advantage. Some even use a technique known as “credit card offsetting” where you use your credit card to buy all the goods you would normally purchase on your debit card and then place the money you have saved in a high interest bank account. However you plan to use your credit card, there are a number of tips and pitfalls to be aware of to get the most for your money.
Switching too frequently between credit cards to take advantage of 0% balance transfers can result in a negative affect on your credit rating. Many consumers are still under the impression that you can switch between credit cards at will and never pay a penny in interest. Alas, lenders are wise to this and have taken measures to prevent it. Firstly, many credit card providers will charge a balance transfer fee; others may refuse your application if you have previously used 0% balance transfer offer - and an application refusal can be a black mark against your credit rating. Lenders are also able to asses the number of credit searches that have been made against your name - they may refuse credit if there have been too many searches.
Secondly, make sure you understand the terms and conditions of 0% interest on purchases. Most lenders offer a set period where you will not have to pay any interest on new purchases that you make. This could run until a particular date like the MBNA Platinum card which offers 0% until March 2008 or for a fixed period running from your start up date (e.g Barclaycard Premium offers 3 months interest free on purchases). Obviously if you are planning on making large purchases, the 0% interest free period can be an incredible boon - especially if used in conjunction with any discount or special offers available as part of some credit card introductory offers.
Credit cards can be an extension of your lifestyle. While 0% balance transfers and 0% on purchases are the main incentives for many lenders there are also a huge variety of other credit card introductory offers, often specific to a particular card. Some are designed to appeal to your lifestyle choices - Barclaycard OnePulse, for example, has tied in with the Oyster Travelcard so you only need one card for travel and shopping while the MBNA WWF card makes a contribution to the World Wildlife Fund for every card. Other cards appeal more directly to your pocket offering discounts and special offers at specific retailers - Virigin Credit Card offers discounts at the Virgin Megastore & Virgin Holidays while Egg offers up to 10% at selected retailers. If you already spend a great deal of money at a specific retailer included in a credit card introductory offer then it gives you the opportunity to make potential savings.
For most of us the bottom line is going to be the APR. Unless you’re prepared to dedicate time and energy to highly efficient managing of your credit - certainly worthwhile, but not generally how most of us spend our time - then the most important factor in deciding on which card to choose will be how much will it cost us to borrow money on this credit card? Rates vary but are typically between 14.9% to 16.9% although Capital One are offering rates as low as 9.9% with their Platinum card. Whichever card you choose, it’s important to remember that you will get the best out of your credit card if you manage your spending carefully and pay off your outstanding balance in full every month.