Feeling the crunch – why do we seem so poor?
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| (C) Rex Pictures |
2. Play your cards right
Credit card providers should make it easier for consumers to shop around and compare deals, the Office of Fair Trading (OFT) said this week.
The OFT found that 70% of credit card holders had not shopped around for the best deal and that cardholders are "throwing money away" by not comparing cards before making an application.
It makes sense, especially when price comparison website Moneysupermarket says you could save up to £631 by switching credit card. We also end up losing £400m a year by not understanding calculation methods, according to the OFT.
Checking the interest rate and understanding how it’s worked out is even more important if you have a big credit card bill. Take this example from Moneysupermarket:
Imagine you have a card that charges a typical interest rate of 15.9% and a debt of just £360. If you pay just the minimum repayment amount every month it would take you an incredible 10 years and seven months to pay it off.
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Show no interest
There are currently more than 60 credit cards that will charge you no interest for a set introductory period, usually from six to 12 months, on a balance you transfer from another card.
Although you might have to pay an initial balance transfer fee, these cards will buy you something far more important – time to pay off your debts.
Even if you think you won’t be able to pay off your debts during an interest-free period, you could still save. Look instead at switching your balance to a card that charges you less interest than your current one.
