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Credit card rates rise as banks bite back
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There is some good news for credit card users as both the number of 0% introductory deals and their duration has increased.
In April 2006 just 58 cards offered 0% on purchases for up to 10 months, compared with the current 85 cards, offering the rate for up to 12 months.
There has also been a rise in the number of cards offering 0% balance transfer deals, with these increasing from 82 two years ago to 99 now, while the length of the deals has improved from up to 12 months to up to 15 months.
“The market for balance transfers in the last two years has been very competitive with many institutions increasing the length of their deal,” says Michelle Slade from Moneyfacts.co.uk.
“However, many institutions are tightening lending criteria so only those with perfect credit histories will be able to take advantage of these longer deals, and even then the interest free limits will be much smaller than they would have been granted previously.”
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To improve your chances of being accepted for credit you should:
1. Make sure you’re on the electoral roll
Lenders use this to verify your identity to prevent ID fraud
2. Ensure you have a credit record
Banks are wary of people who’ve never borrowed, as there is no evidence they can be relied on to pay back the money. Create a history by signing up for a store card (you don’t even have to use it) or mobile phone contract
3. Never miss card or loan repayments
Set up a direct debit for at least the monthly minimum to ensure you don’t forget. Then pay any extra you can by bank transfer
4. Target lenders carefully
If you don’t have a perfect record, use Moneysupermarket.com's “Smart Search” tool to find the ones most likely to consider you. And don’t apply unless you plan to accept
5. Close accounts you no longer use
Even if they show a zero balance, lenders will take the potential credit into account when assessing whether to give you more.
6. Settle court judgments against you
Do this as soon as possible and ensure it’s recorded on your file
7. Check your file before you apply for credit
The three main credit reference agencies, Experian, Equifax and Callcredit can supply copies of your credit report.
