Pre-paid credit cards keep holiday spending under control

Pre-paid credit cards are becoming increasingly popular as Brits attempt to curb their spending in times of tight credit, new research from Virgin Money reveals.

Struggling Brits rely on credit cards to survive the crunch

Brits could potentially incur a staggering £253.6billion debt on their credit cards, research from financial comparison website moneysupermarket.com has found.

Balance transfer fees

Rare is the balance transfer offer that doesn’t come with some sort of balance transfer fee. It might be a flat rate like $50 or $75 but it’s usually a percentage of the total amount of each balance transferred. Maybe 3% doesn’t sound like much but if you’re transferring several thousands of dollars, that fee can be hundreds of dollars! Transferring balances from a high-interest rate credit card to one with no or a lower interest rate can save you a substantial amount of money if you don’t fall victim to these common mistakes.

Not transfer

Although you may know by now to look for such fees, there’s something else you need to look for: whether or not there’s a cap on how high the balance transfer fee can go. Avoid those without caps. Before taking advantage of an offer, always do the math. If the balance transfer fee ends up being more than you would have paid in interest had you not done the transfer, then don’t transfer!

Other interest rates

While there might be low or no interest on balance transfers, you’re still getting a new credit card which means you’ll still be able to use it to make purchases. Purchases though, normally aren’t part of the no or low interest deal. In fact, you can expect the interest rate on purchases or cash advances to be just as high as or higher than the credit cards you’re already using to make purchases. If you’re serious about chipping away at your debt, which is really the best reason to take advantage of balance transfer offers, then you really should stop accruing credit card debt!

Payment allocation

If you do transfer balances to the new account, and you do make purchases on this new credit account, you may be surprised to find that your payments are not allocated the way you thought (assumed) they would be. Say you transferred $1,000 and during the last month you made new purchases totaling $200. You make a payment of $300 thinking you’ll clear away the new charges and start chipping away at the balance transfer amount.

Interest rate after intro rate expires

That low or zero interest rate won’t last forever and you need to know how much it’ll increase when the stated period expires. That’s because any balance remaining afterwards is likely to be whacked with a much higher rate. To keep this from happening – which negates any savings benefits you’ve reaped so far – make sure you have a plan for paying off whatever balance you transfer before the rate increases. Also make sure you don’t miss a payment or make payments late. If you do you might find – without warning – that your zero percent no longer applies and you’re paying more in interest than you were before.

On-Line Credit Applications are Fast and Easy

Gone are the days of waiting several days or weeks to be approved for a credit card. While it is still possible to apply for credit via “snail mail,” it is now more common than ever to apply for any type of credit via the Internet. With the help of the Internet, it’s possible to apply for and receive approval on a line of credit in a matter of seconds or minutes. Falling into the trap of overspending on credit cards during the holiday season is never a good thing as far as your wallet is concerned, but wise spending with credit during your holiday shopping can be really beneficial. How many times per week does your mailbox contain an offer for a pre-approved credit card?

With a Less Than Perfect Credit History

Many people have run into trouble or a shortage of cash flow from time to time that has resulted in the inability to make all of their payments in full and on time. However, just because you don’t have a perfect credit history does not necessarily mean that you will be unable to obtain a credit card. Many merchants and large department stores offer their customers credit cards with a “cash back” option, hoping that the credit cards will entice their customers to do more of their shopping in their particular store, and charge their purchases with the credit card in order to receive the cash back reward instead of making purchases with cash. Different people need different types of credit cards. What's right for one person may not be right for another.

How Business Owners Can Choose a Credit Card

Small business owners now have a wide variety of credit cards to choose from, and it makes it difficult to choose the best one for your small business. As a small business owner, you will need to decide which features you think that the company will use most often, and if they are worth using and having, before applying to a card. Many of the credit card companies now offer many attractive tools that can and will help each small business owner in their everyday spending and tracking. Also remember that it is harder to keep getting credit cards after the first couple, so choose wisely when choosing business credit cards. Many new small business owners do not have a credit card account specific to their business.