Make sure your plastic friend is as flexible
the slate clean
Before you start, make sure your credit rating is good – you can order an online report from Experian, Equifax or CallCredit for just £2 if you’re in any doubt.
cheapest is best
If you tend to pay off your credit card balance in full in some months but not others your focus should be on the lowest interest rate. The best way to compare interest rates is to look at the APR (annual percentage rate) charged on purchases. But also check out the amount of time the credit card allows between making your purchase and starting to charge interest – most tend to allow 59 days, but some start charging right away. Once you have your card the rate can change, so regularly review the rate to ensure it’s still competitive.
If you’ve built up a credit card debt then transferring the debt to a new card that offers 0 per cent interest for a set period on balance transfers can help you get back in control. If current deals continue, you could avoid paying interest on your credit card debt for anything up to 16 months, giving you plenty of time to try to clear it.
If you know you’re going to have to hit the plastic in the near term and won’t be able to pay off your bill in full each month, a card offering 0 per cent interest on purchases for a given period of up to 13 months could be the solution. These cards can also be useful if you know you are going to have a short-term fall in income or only work seasonally.
If you pay off your credit card every month without fail you can afford to focus less on finding the lowest interest rate and more on being rewarded for being such a good customer. These days you can accumulate airmiles and loyalty points, claim cashback or make charitable donations, so you really can get something for nothing. With cashback cards, bear in mind that some offers are only temporary and may only run for the first six months and some only apply when you spend on specific items.
A growing number of cards now offer 0 per cent