Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
The NEXT BIG EMPIRE WILL BE..... CANZUK - 25th June 22
Who (or What) Is Really in Charge of Bitcoin's Price Swings? - 25th June 22
Crude Oil Price Forecast - Trend Breaks Downward – Rejecting The $120 Level - 25th June 22
Everyone and their Grandma is Expecting a Big Stocks Bear Market Rally - 23rd June 22
The Fed’s Hawkish Bite Left Its Mark on the S&P 500 Stocks - 23rd June 22
No Dodging the Stock Market Bullet - 23rd June 22
How To Set Up A Business To Better Manage In The Free Market - 23rd June 22
Why Are Precious Metals Considered A Good Investment? Find Out Here - 23rd June 22
UK House Prices and the Inflation Mega-trend - 22nd June 22
Sportsbook Betting Reviews: How to Choose a Sportsbook- 22nd June 22
Looking to buy Cannabis Stocks? - 22nd June 22
UK House Prices Momentum Forecast - 21st June 22
The Fed is Incompetent - Beware the Dancing Market Puppet - 21st June 22
US Economy Headed for a Hard Landing - 21st June 22
How to Invest in EU - New Opportunities Uncovered - 21st June 22
How To Protect Your Assets During Inflation - 21st June 22
AI Tech Stocks Current State, Is AMAZON a Dying Tech Giant? - 20th June 22
Gold/Gold miners fundamental checkup - 20th June 22
Personal Finance Tips: How To Get Out Of A Tough Financial Situation - 20th June 22
UK House Prices Relative to GDP Growth - 19th June 22
Will Global Markets Be Pushed Deeper Into Crisis Event By The US Fed? - 19th June 22
Useful Things You Need To Know About Tweezer Top Candlestick Pattern - 19th June 22
UK House Prices Real Terms Sustainable Trend - 17th June 22
Why I’m buying the “new” value stocks… - 17th June 22
Optimize Benefits from R&D in Software Product Development with an R&D Tax Credit Software - 17th June 22
Want To Save On Your Business Energy? Here Are Some Helpful Tips - 17th June 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Use Credit Cards Sparingly to Avoid a Debt Hangover

Personal_Finance / Credit Cards & Scoring Jul 05, 2016 - 12:57 PM GMT

By: MoneyFacts

Personal_Finance

Credit cards have long been established as a popular payment method and are currently celebrating their 50th birthday in the UK. However, increasingly tempting credit card limits (Barclaycard estimates that the average limit is now a staggering £4,000) mean that borrowers could find themselves falling into a spiral of long-term debt.

However, credit cards can be helpful if used sparingly, and if borrowers ensure that they grab a good deal and pay more than the minimum repayment each month.


There is now considerable variety in the credit card market, which means that borrowers have more opportunity to find the perfect card for their borrowing needs. Interest-free credit cards are great for those who are looking to spread the cost of a larger purchase or debt, while low rate purchase cards are a straightforward choice for those who are planning more regular spending. Hunting down a best buy deal will also ensure that the card works in the borrower’s favour - see the table below, compiled by Moneyfacts.co.uk, for more details.

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“Credit cards are a shining example of how consumers embrace payment methods that save them time and money. However, this useful bit of plastic doesn’t always come cheap. Most credit cards on the market currently charge 18.9% APR, which is well over double the rate on the best low rate credit card. In addition, the average purchase APR has steadily risen over the years to its present all-time high of 22.3% APR.

“Borrowing £4,000 on a card charging 18.9% APR will cost £1,097 in interest and the debt would linger for two years and 10 months if a repayment of £150 is made each month. However, if a borrower opted for a credit card charging 6.4% APR, the lowest rate currently on the market, and made the same repayment, then they would save £780 in interest. And if they used the best interest-free credit card and paid back the debt before the offer ended, then they could avoid accruing interest charges altogether*.

“The real danger with credit cards is that consumers can become too comfortable with debt. Larger credit limits mean that it’s too easy to innocently increase the amount of money owed, and this can lead to a never-ending vicious cycle of debt.

“Certain measures, such as stopping automatic credit limit rises and alerting customers when deals end, could help borrowers manage their debt. Another helpful feature would be for card providers to encourage borrowers to pay more than the minimum repayment each month.”

*Credit card cost based on a £4,000 debt with a fixed monthly repayment of £150. Once the remaining debt reaches £150 or less, a minimum payment of 1% of the debt plus monthly interest or £5 per month is made, whichever payment is higher. Based on 18.9% APR it would take two years and 10 months to clear the balance with £5,097 repaid in total. Based on 6.4% APR it would take two years and five months to clear the balance with £4,317 repaid in total. The best introductory 0% interest purchase credit card is shown in the table.

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in