Credit Secrets exposed

The Ins and Outs of Credit Card Debt Settlement

2011-01-13T23:23:00.000Z

Are you a self-confessed shopaholic who buys anything and everything that you get your shopping addicted hands on? Such thoughtless and impulsive buying will most likely result in the accumulation of a bunch of junk that will simply collect dust. Can you even remember that silk scarf you just had to have and since it was a virtual steal at 50% off you just had to buy it? Where is it now and how many times have you actually worn it? Is it still fashionable?

If you're like most people, chances are you'll have to rummage through bins and bins of collected shopping "litter" which you've accumulated through the years, just to be able to see that once precious scarf. You may still be in a state of denial by saying "Fashion goes round and round and that scarf will have its shining moment once again."

Unfortunately, many people fall into this mode of impulsive buying that they really can't afford and before they realize it they become saddled with debt. If you fall into this category, you'll soon need to learn a thing or two about debt settlement which can assist you in extracting yourself out of that self-imposed state of financial trauma and begin to start rebuilding your life bit by bit. And the time to start is now! Of course, you have to be honest with yourself, admit that you've got a serious debt problem and then humble yourself enough to seek the help you need to pull yourself out of this devastating ordeal.

First things first, a lot of people may actually think that they only have a few choices when it comes to solving their debt problems. The two most common options for those who are burdened with enormous amounts of debt are either to consider declaring bankruptcy or debt consolidation. Unfortunately, if you take the easy way out by declaring bankruptcy, it will leave an embarrassing and indelible mark on your credit report for up to 7 years, which will result in higher interest rates, less credit and if you try do qualify for a mortgage (some lenders do give loans immediately after bankruptcy) you will most likely not be able to get a loan to cover 100% of the financing you need. Normally, an 80% first mortgage and if you can get a second mortgage, it will be at much higher interest rate and probably only 10% of the loan value for a total of 90% of the loan to value and you'll have to come up with 10% down.

Clearly, everything will come with a higher price for a period of time but you'll have to weigh that with a straight debt consolidation solution in which you pay off your debt. However, in many cases you can negotiate with the collection agency and it's realistic to get 25% - 50% of the debt forgiven, if you can show that you'll continue to make monthly payments until the remainder is paid off.

Many of the debt settlement / debt consolidation lawyer companies were actually established by the credit card companies themselves. Why, you ask... because it only makes sense for the credit card companies to help you pay off your debt because they can either forgive some of the debt or reduce the interest rates, lower the monthly minimum payment requirements or some combination and get paid a portion of the money owed or receive nothing if you declare bankruptcy. What would you do if you were in their shoes? The answer is obvious. This is why a lot of people who have been saddled with debt are now being offered debt settlement. Of course, not all debt consolidation service companies are owned by credit card companies but many are.

Some groups of lawyers offer debt settlement programs through arbitration. The "selling point" when it comes to these kinds of solutions is that debt settlement will actually help end your debt problems, without having to go through declaring bankruptcy, without having to pay overcharged debt consolidation program fees as well as helping you avoid getting caught in the debt consolidation trap that a lot of people have fallen victim to.

In many cases, what the lawyer organizations do that offer debt settlement services is negotiate your debt down with the collection agencies that have been given your case. I would encourage you to contact a number of lawyer companies to ensure you feel comfortable and that you are working with a quality company that doesn't over-charge you for their services.

On the other hand,if you would really like to save money, which only makes sense since you are already heavily in debt... then negotiate with the lawyer collection agency yourself. It's not difficult, rather than getting upset when you get called night after night simply tell the collection agency rep that you would like to pay off your debt but you can only do it if you can get it reduced and then ask them that you would like to get the debt you owe reduced by 50% - 60%, even 75% and ask them to see what they can do. Ask for a lot up front because as in any negotiation there's always a give and take. Believe me, they will go to work for you and your offer will be seriously considered because they only get paid when they collect and it's better to get their percentage on a smaller amount than "diddly squat" on the full amount.

Of course, you'll have to decide what route you want to take... bankruptcy versus debt settlement but shop around and realize that you do have options. The internet is full of lawyers offering their bankruptcy or debt settlement services, but be careful and don't let them push you around and never work with anyone you don't feel 100 percent comfortable with.

Do You Need Bad Credit Help

2011-01-11T21:59:00.002Z

? Are you one of thousands with no
credit and no collateral to help secure approval, or you just
have extremely bad credit and no one wants to help you, and all
you hear is stories and more stories?

Bad credit is a term used to describe a poor credit rating.
Common practices that can damage a credit rating include making
late payments, skipping payments, exceeding card limits or
declaring bankruptcy. Bad Credit can result in being denied
credit.

Bad credit can result in a negative rating from the credit
reporting agencies. Many factors can contribute to someone
getting a "bad credit" rating, among these are non-payment of an
account or late payments over an extended length of time.
Whether non-payment of an account is willful or due to financial
hardship, the result can be the same, a negative rating which
will result in a low credit score. However, lenders are more
willing to work with individuals if the person contacts the
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A credit score is defined as a statistical method of assessing
an applicant's credit worthiness. An applicant's credit card
history; amount of outstanding debt; the type of credit used;
negative information such as bankruptcies or late payments;
collection accounts and judgments; too little credit history,
and too many credit lines with the maximum amount borrowed are
all included in credit-scoring models to determine the credit
score.

Raising your credit score is possible. It's a well known fact
that lenders will give people with higher credit scores lower
interest rates on mortgages, car loans and credit cards. If your
credit score falls under 620 just getting loans and credit cards
with reasonable terms is difficult.

Here are five things that you can use to raise credit score.

1. Correct obvious mistakes.

Your credit score is what shows up in your credit report. Review
your reports from all three credit bureaus for accuracy once a
year as well as several months before applying for a loan.
Changing a mistake on your report can take 30 days to three
months, or more. Get Your credit report from the three major
bureaus: Experian, Trans Union and Equifax.

2. Pay Your Bills On Time

Your payment history makes up 35% of your total credit score.
Your recent payment history will carry much more weight than
what happened five years ago.

Missing just one payment on anything can knock 50 to 100 points
off of your credit score.

Paying your bills on time is the best way to get started
rebuilding your credit rating and raising your credit score.

3. Reduce your credit card balances.

A heavily weighted factor in your FICO score is how much money
you owe on your credit cards relative to your total credit
limit. Generally, it's good to keep your balances at or below 25
percent of your credit card limit, said Jeanne Kelly, founder of
The Kelly Group in Brookfield, Conn., which helps clients
improve their credit scores.

4. Don’t Close Old Accounts

In the past people were told to close old accounts they weren’t
using. But with today's current scoring methods that could
actually hurt your credit score.

Closing old or paid off credit accounts lowers the total credit
available to you and makes any balances you have appear larger
in credit score calculations. Closing your oldest accounts can
actually shorten the length of your credit history and to a
lender it makes you less credit worthy.

If you are trying to minimize identity theft and it's worth the
peace of mind for you to close your old or paid off accounts,
the good news is it will only lower you score a minimal amount.
But just by keeping those old accounts open you can raise credit
score for you.

5. Avoid Bankruptcy

Bankruptcy is the single worst thing you can do to your credit
score. Bankruptcy will lower your credit score by 200 points or
more and is very difficult to come back from.

Once your credit score falls below 620, any loan you get will be
far more expensive. A bankruptcy on your credit record is
reported for up to 10 years.

The reality of a bankruptcy is it will limit you to
high-interest lenders that will squeeze out high interest rate
payments from you for years.

It is better to get credit counseling to help you with your
bills and avoid bankruptcy at all costs. By getting credit
counseling instead of declaring bankruptcy you can raise credit
score over a much shorter period of time.

Beware Of Bad Credit Payday Loans

2011-01-11T21:57:00.000Z

Could bad credit payday loans be the answer consumers with low
bank accounts have been looking for? Is there any harm in using
these services? Aren't they better than using credit cards or
going hungry?

Have you seen the commercials? Cute characters promise financial
prosperity. Happy, professional individuals appear to regularly
visit their corner pay day loan shop as proudly as cashing a
check at the bank. Customers at the grocery store all recommend
pay day loans as the easy solution for a lack of funds.

WHY USE A PAY DAY LOAN?

Some individuals reason that paying a bill with borrowed money
is better than receiving bad credit marks because of not paying
the bill. This is understandable. However, some financial
institutions are willing to make the occasional exception if
contacted about the situation. Or there may be a small fee, but
not a credit report made.

Using it for groceries or other items? Consider the true cost
before making a decision. Compare the cost of using a pay day
(or cash advance) loan to the fees charged for taking a cash
advance on your own credit card. Can family help? Often those
who are forced to use pay day loans are not able to repay the
loan by the next pay check and that can lead to a cycle of debt
and stress.

WHAT IS THE COST?

Several sources, including a consumer report by the FTC (Federal
Trade Commission) and the CFA (Consumer Federation of America)
state that usual the usual APR is between 350 - 650% with some
as high as 780%.

A loan of $100 ranges in cost between $15 - $30. If the loan is
not repaid by the pay date then it can be renewed with another
fee due at each renewal. A loan of $100 can cost $60 in fees
after 3 renewals.

WHO BENEFITS?

Based on the warnings issued by federal and consumer
organizations it is clear that using pay day loans or cash
advances from these businesses can often lead to more debt and
problems. Some sites were reported to automatically roll over
the loan and only withdraw the renewal fee on the pay date.
Other sites surveyed by the CFA required customers to agree in
contract to not participate in class action suits or to file for
bankruptcy.

For those who are having debt problems it is recommended to seek
no- or low-cost credit counseling from a local non-profit
organization. These organizations can help with reducing current
interest charges and lowering monthly payments. If the problem
is budget, you should look to a financial planner who can help
you to manage the money you do have and avoid using credit at all.

16 months interest free from MBNA

2010-12-31T19:15:00.003Z

Borrowers can get 16 months interest-free on balance transfers with a new card from MBNA.
Lawyer fees can vary but a good lawyer can help you clear your credit score and help you obtain loans

The giant credit card company has launched its Balance Transfer card, which matches the best 0% deals around. the 2.9% fee - equivalent to £43.50 on a typical £1,500 sum transferred - makes it a best buy along with Barclaycard Platinum Visa.
You must transfer any balance from another card within the first 60 days. Next best is Yorkshire Bank Gold Mastercard.
It has the same interest-free period, but has a marginally higher fee of 3% - costing you £45 on a typical transfer.
MBNA also has a Dual card, which offers 0% on balance transfers and purchases for 12 months. The balance transfer incurs a fee of 2.98% - so this would be £44.70.
After this, purchases are charged at 18.9 pc.
The longest introductory purchase period is with Tesco Bank. It has 0% for 13 months. Sainsbury's Finance and Barclaycard Platinum Purchase Visa also offer 12 months' interest-free purchases.
A final alternative for borrowers is a card that has a low interest rate for life. Barclaycard Platinum Simplicity has a rate of 6.8% - lower than most personal loans - and no balance transfer fee. This will help you maintainyour credit score and help obtain loans
Loans Finance money

View the original article here

Virgin Money extends 0% balance transfer

2010-12-31T14:43:00.001Z

Virgin Money has extended the 0% introductory period on its balance transfer credit card making it one of the best cards available on the market.

New customers will be offered a 16 month interest-free period on balance transfers.
The balance transfer fee has also been reduced to 2.89% (for transactions made within 60 days of the account opening) which makes it the lowest among all 16 month 0% balance transfer cards
However, while balances switched over to the Virgin Credit Card will be sheltered from interest for 16 months, new purchases are only interest-free for the first three months only.
And once the introductory 16 month period ends it reverts to a typical interest rate of 18.9%.
It is important to note that as the Virgin Credit Card is issued by MBNA you can't transfer a balance from another credit card issued by them.
The interest charged on cash transactions also stands at a whopping 27.9% so these types of transactions are best avoided
Chris Griffiths, head of Credit Cards at Confused.com said: 'This type of competition is great for those looking to consolidate existing debts, with significant savings to be made over 16 months if the balance stays interest-free. A typical customer transferring a balance of £2,200 could save £447 over 16 months compared to those paying the average 18.69% APR.'
Tara Evans, of This is Money, said: 'As Virgin have extended interest-free period this makes it one of the best cards on the market for balance transfers.
Despite RBS and NatWest extending their 0% balance transfer period back up to 16 months, the cards are still only available to existing current account customers.
But introductory offers don't stick around for long so if you want to take advantage you will need to apply quickly.
If you have a large balance which is building up interest on a different credit card this might be one for you.
Leading credit card deals, like the Virgin balance transfer card, are only offered to people who an excellent credit history ? so it might be worth checking getting a free credit check before applying.
Find the best credit card for you
• Read our guide to the best credit cards for balance transfers or do your own research using our credit card finder.
business loans and student loans, contact you LAWYER for help in solving your credit score

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Avoid store cards if you don't want debt

2010-12-31T10:40:00.000Z

Women are being warned against taking out store cards to pay for party dresses and presents this Christmas.

Many of the favourite stores of young shoppers ? Warehouse, Wallis, Miss Selfridge and Dorothy Perkins ? push cards with eye-watering interest rates of almost 30%.
Anyone spending £500 and repaying only the minimum 4% each month would take ten years and four months to repay the debt and be charged £523 interest, according to data analyst Moneyfacts.
There are 12.9m store cards in circulation with a staggering £2.2bn spent on them in the past 12 months, even though they remain one of the most expensive forms of borrowing.
There are three times more single women struggling with store card debt than single men, according to charity the Consumer Credit Counselling Service, with the average debt at £1,301.
Staff are given incentives to sell the cards and often pressurise customers into signing up at the till, promising discounts of 10% on their purchase if they sign up immediately.
Sue Edwards, of Citizens Advice, says: 'There is a problem with the way store cards are sold. Targeting young women at the till means customers are usually more focused on the discount for their purchase than the terms and conditions of the credit.'
Karen Millen, New Look and Oasis also charge high rates of 28.9%. But it is not just clothes stores that charge exorbitant interest ? families could be stung when buying presents or Christmas decorations. Argos and Homebase charge 29.9%, while B&Q's rate is 23.9%.
Michelle Slade, of comparison site Moneyfacts.co.uk, says: 'Customers who repay only the minimum amount on store cards could end up paying twice the price and still be repaying the debt in a decade's time. Do not touch store cards unless you can afford to pay off the balance in full every month.'
The cheapest rates are at Debenhams, House of Fraser, Laura Ashley and Topshop, which all charge 19.9%. However, these are still much more expensive than the best credit cards. Tesco Bank, for example, offers 0% interest for 13 months and an interest rate of 16.9% thereafter.
A 0% credit card is also a better choice because it can be used anywhere, not just at one particular store.
Kevin Mountford, at comparison site Moneysupermarket.com, says: 'Worryingly, staff selling store cards often target low-paid or vulnerable young adults who are lured by a discount, do not necessarily understand high interest rates and cannot afford to repay the debt. Also staff selling the cards often have little or no financial understanding, so cannot always explain how interest rates work.'
Store cards are a good money spinner for retailers ? first because they can usually be used only in that particular shop, which encourages people to spend more there.
Second, stores often receive commission for every card sold from the bank that provides the credit. It is not just on the High Street that women are targeted ? online fashion stores such as Very.co.uk, which sponsors The X Factor, offers a 'buy-now-paylater' deal where customers could be charged more than 39.7% interest if they do not clear the debt within the interest-free period.
In its coalition manifesto the Government proposed banning excessive interest rates on store cards and introducing a seven-day cooling-off period that would mean customers are unable to use the card for a week after taking it out to stop the hard sell at the till.
However, it remains unclear when this is likely to come into force. Fiona Hoyle, at the Finance & Leasing Association, says: 'Almost 13 million people enjoy the benefits of store cards and most have a zero or credit balance. People are very capable of using them sensibly and shouldn't have to miss out on good offers.'
Citizens Advice has launched a new website for under 25s struggling with debt at www.citizensadvice.org.uk/advice4me.

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How can I stop credit card harassment?

2010-12-31T06:56:00.000Z

My credit card is £700 over its limit and though I am paying the amount asked for every month and have never missed a payment I am being harassed by phone calls from the card issuer asking when I am going to pay off the overspend.

As I cannot afford to pay any more than I am doing is there anything I can do to stop these unwanted calls? A.H., Leeds
Simon Moon from This is Money replies: Your credit card issuer seems to have decided your are in financial difficulties even though you say you have not missed any of the required monthly payments.
Under the revised Banking Code published in March last year banks promised to be 'sympathetic and positive' when dealing with struggling customers. Part of this positive approach is to help customers set up a debt management plan, which is what you are being pressured to do.
While banks and credit card companies and the like have the right to ask for their money they must not bully people into paying up.
However, the Financial Ombudsman Service says problems sometimes arise when customers are in denial about their debts and refuse to talk to their banks.
That's when they might receive lots of calls, which can lead to accusations of harassment.
Even if you are in difficulties, you have the right to insist the card company calls you only between certain times on certain days so, for example, you do not have to discuss your finances when work colleagues might be listening.
If you feel you are being treated unreasonably, you can complain to the Financial Ombudsman Service which can order the card company to leave you in peace.
• Further information:
How to complain to the Financial Ombudsman Service
Independent help with debt management
The Banking Code (pdf)

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Spend on credit card and give to charity

2010-12-31T02:02:00.000Z

Unlike Christmas cards, credit cards backed by charities help good causes all year round.

Popular cards include the Breakthrough Breast Cancer Visa card by MBNA, the NSPCC MasterCard from Halifax and the Co-operative Bank Oxfam Visa card.
A charity card allows the holder to give regularly to charity at no cost.
Most cards pay an initial donation for taking out the card, typically £15 to £20. Further donations are made by the issuer each year, typically 0.25%, depending on the amount spent on the card.
One of the best charity cards is Virgin Money's Charity Credit Card, which gives a choice of 1,500 charities. A chosen charity receives 0.8% of total annual spending, which can be topped up to just over one per cent through Gift Aid.
Its standard purchase interest rate is 12.9%, which compares with a typical rate on charity cards of 16.9% to 18.9%.
The interest rates on charity cards are not the cheapest. Always check the rate, known as the APR (annual percentage rate), before taking out a card.
For those who do not pay the balance in full every month, it might be better to choose a more competitive card with a lower interest rate, or even zero per cent offer rate, then give an equivalent amount to a chosen charity.
'Many people lead busy lives and while they have good intentions they may not get round to sorting out their charitable donations,' says Michelle Slade of Moneyfacts, the financial data compiler.
'A charity credit card is one way to ensure some of your spending helps towards your chosen good causes.'
But James Daley, editor of Which? Money Magazine, says most consumers should avoid charity credit cards. 'Most pass on only a small percentage of what you spend to the charity,' he says.
'People are better off taking a cashback credit card and donating direct to charity. There are credit cards available offering 13 months interest-free on purchases.
'Shoppers should use the big savings made on credit interest to donate to charity instead.'

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Leeds' new cashback credit card: Is it any good?

2010-12-30T22:56:00.000Z

The new Platinum Credit Card from Leeds Building Society offers the opportunity for customers to earn 0.5% cashback on all purchases.

There is a maximum annual spending limit of £15,000 and cashback is credited to customer's accounts once a year in January.
There is an introductory 0% interest rate on purchases for three months from the date the account is opened.
The rate is 17.9% APR (variable) and there is also 0% on balance and money transfers for 12 months with 3% and 4% handling fee respectively.
Martin Richardson, from Leeds Building Society, said: 'Our new Platinum Credit Card sits favourably in the market. We are offering a winning combination of great introductory rates on balance transfers and card purchases and the opportunity to earn 0.5% cash back on all day to day spending.'
'Customers are enthusiastic about an account that offers 0.5% cash back on all their day to day spending and they will receive this credit in January, just after what is traditionally an expensive time of year.'
Tara Evans, from This is Money says:
If you are going to pay off your balance in full each month then a credit card with rewards, like the Leeds Building Society Platinum, can work.
There are a number of different rewards cards on the market, offering anything from cashback to airmiles to supermarket loyalty points. So you need, you need to consider what you will get the best benefit from.
Getting any cash back is a bonus but consider this. Even If you were to put the vast majority of your cash and debit card spending onto a reward card like this - say £1,000 a month - that would recoup you just £5 in cash back (at 0.5% cash back). Now, £5 is better than nothing but you may have to wait several months to get it. In the meantime, you risk missing a payment which would then trigger interest that would wipe out any cash back gains.
If you're unable to pay off your balance in full then opting for a credit card that doesn't offer rewards but does offer a lower rate of interest may be the best option. However, the actual interest rate you will be charged will be based on your credit score.
The best credit cards that do not offer rewards such as cashback boast interest rates from as low as 7% APR, or around 12% APR for all but those with the best credit scores.
These are significantly lower than the APR on most reward credit cards where rates tend to start from about 16% APR.
We've rounded up the best credit cards for rewards and spending but if you want to do the research yourself you can use our credit card finder.

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6m have a year of debt on credit cards

2010-12-30T18:11:00.000Z

More than six million people have had an outstanding balance on their credit card for a year or more.

And almost one in ten people admit they only pay off the minimum amount of their credit card each month, according to research by Moneysupermarket.com
This has lead to 14% of people having debt on their credit card for over five years.
If consumers fall into the dangerous trap of only paying off the minimum amount on their credit card it can be a vicious cycle.
The interest charged on their balance means the total amount they pay back skyrockets.
For example, it would take someone paying back the monthly minimum repayment on £1,000 borrowed, at 18.13% APR, 17 years to repay their debt.
More shockingly, the amount of interest they would pay is £1,113 ? meaning they end up paying back more than double the original sum borrowed.
The average length of time a balance is left outstanding on cards is currently a whopping 21 months, so making sure consumers understand their repayment structure is crucial.
Kevin Mountford, head of banking at moneysupermarket.com, said: 'Our research reveals credit cards are still playing an important role in the nation's finances, but in the current climate, it's more important than ever for consumers to understand the cheapest way to borrow on their cards and avoid getting stung by high interest rates.
'The most important thing is that consumers understand the implications of borrowing on a credit card and that paying back the minimum amount each month will dramatically increase the total amount they pay back in the long run.'
'Credit cards are not designed for long term lending and anyone with an outstanding balance on their card should consider switching to a product offering 0% interest on balance transfers, allowing them to pay back the debt without incurring any further interest charges.'
Moneysupermarket.com asked customers if they had an outstanding balance on their card for more than a year. The figure was then applied to the UK adult population to calculate that 41%, or six million Britons are in debt on their credit card for more than a year.
What can you do if this is you?
This is Money says: If you have a long-standing credit card balance you need to do three things:
1) Give yourself a reality check with our calculator
2) Shift your debt on to cards with the lowest interest rate
3) Start paying it off
To get your debt on to the best interest rate possible you need to investigate balance transfer cards. These will allow you to transfer your outstanding debt and cut your interest rate. They are not as easy to find as they once were but there are still plenty around with long 0% interest rate periods. Just make sure you take into account the fees involved - between 2% and 3% on most cards - with transferring debt.
Once you have the debt at the best possible rate, it is time to make a plan to repay it within the length of the 0% deal. If you can't do that, a life of balance transfer card may be better - this gives a low rate for the entire time the balance is on the card.
A word of warning though. Make sure you don't spend on the card. This will get you further into debt and in many cases the credit card company will stick this more expensive debt under the balance transfer and it will sit their building up interest unable to be paid off. The link below will help you find balance transfers with no fees or low fees.
›› The best fee free balance transfer cards
›› Use our comparison tool to list long 0% balance transfer deals

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The best credit cards for Christmas

2010-12-30T13:15:00.000Z

With less than 10 weeks to Christmas you may be thinking about getting a credit card to help manage your spending this festive season.

We usually don't advocate mentioning Christmas before November (at least), or that you should use a credit card to plug a spending gap (unless you can pay the amount off in full).
However, we do appreciate that the festive season is one time that many might want to splash out and if you have the right credit card to manage your spending you can limit the damage to your finances.
It can take up to a month for an application to be processed so if you want to get a new credit card in time for your Christmas shopping you will need to apply as soon as possible.
0% purchase credit cards
If you want to spread the cost of your shopping over a longer period then a 0% credit card might be the best option for you.
By spending on this type of card you can take advantage of introductory 0% interest (usually up to 12 months).
If you know you're not going to be able to pay off the balance of your festive splurge immediately then you can spread out the repayment over a longer length of time.
There are several cards available at the moment with 0% interest on purchases ? here are our top picks.
Tesco Clubcard credit card*
Rate: 0% for 13 months then 16.9% APR
Balance transfer offer: 0% for 9 months (then 18.26%) with a 2.9% fee.
Extras: This card also allows you to collect Clubcard points everytime you use it for purchase.
Barclaycard Platinum Visa*
Rate: 0% on purchases for 12 months then 16.9% APR
Balance transfer offer: 0% for 12 months (then) 2.9% balance transfer fee
Extras: No transfers are allowed from other Barclaycards.
Sainsbury's credit card*
Rate: 0% on purchases for 12 months then 15.9% APR
Balance transfer offer: 0% for 12 months (15.94%) 3% balance transfer fee
Extras: Only available to existing Nectar card holders. For non-Nectar cardholders it is available with 0% on balances and purchases for 10 months, which then reverts to 15.94%. 3% fee on transferred balances.
Virgin Credit Card*
Rate: 0% on purchases for 12 months (then 18.9%)
Balance transfer offer: 0% for 12 months (then 21.9%) with 2.98% fee.
Extras: Additional benefits include discounts on Virgin products such as flights, experience days and holidays.
MBNA Dual Card*
Rate: 0% on purchases for 12 months (then 18.9%)
Balance transfer offer: 0% for 12 months (then 21.9%) with a 2.98% fee.
Extras: No negative payment hierarchy ? this means that any money you pay towards your bill goes towards the most expensive debt first.
Rewards cards
If you've managed to save up for your Christmas shopping then you might still benefit from getting a credit card with rewards.
Remember to shop around to find out which cards offer the best rewards, and weigh up the reward against any interest charges if you're not confident that the balance can be repaid monthly.
Credit cards with rewards often have a much higher interest rate so they are not for anyone who wants to pay off the balance over time.
However, if you intend to pay off the balance in full then a credit card with rewards might be right for you.
AMEX Platinum Cashback*
Reward: For the first three months, customers will receive 5% cashback on purchases, up to a maximum of £100. After that, they can receive up to 1.25% cashback. 0% on purchases for 6 months
Typical APR: 0% for 6 months then 19.9%
Balance transfer offer: None
Lloyds TSB Airmiles Duo Credit Card*
Reward: Collect double Airmiles when you spend abroad.
Typical APR: 15.9%
Balance transfer offer: 0% balance transfer offer for 6 months (3% fee)
Tesco Clubcard Credit Card*
Cashback offer: Collect 1 Clubcard point for every £4 spent on Clubcard Credit Card anywhere in the world and get points as usual from shopping a Tesco
Typical APR: 0% for 13 months then 16.9%
Balance transfer offer: 0% interest on balance transfers for 9 months from account opening (2.9% fee)
Tara Evans from This is Money says:
If you are going to get a credit card to help you manage your Christmas spending (or even to earn extra rewards) then make sure you pay off the balance before the introductory 0% interest period finishes.
Another good reason for using a credit card to do your Christmas shopping is that purchases between £100 and £30,000 will be protected.
Section 75 of the Consumer Credit Act states that for purchases between these amounts, your credit card provider is jointly liable with the retailer if something were to go wrong.
With section 75, if your purchases are faulty or not delivered then you have a much bigger chance of getting a refund.
If you want to do the research yourself then you can use our credit card finder. see our latest here »

* What do the starred links mean?
This is Money receives a fee if you click on the starred links. We include links to sites we do not have a commercial relationship with in exactly the same way. This income enables us to employ journalists to write bias-free analysis and to champion your consumer issues. More on our independence.

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Is this the perfect card for holidays?

2010-12-30T09:30:00.000Z

Sainsbury's has launched a new credit card with family travel insurance and no foreign usage fees - but borrowers must pay £5 per month for the benefits.
The Sainsbury's Gold Credit Card can be used at cash machines and retailers abroad without any fees, and can also be used to withdraw cash at home or abroad without incurring immediate interest.
The family travel insurance provides cover for two adults and up to six children.
The card also offers double nectar points on Sainsbury's shopping instore, online and in petrol stations.
However, the card has no 0% deal and charges 9.94% on purchases and balance transfers if the balance is not cleared at the end of the month, which equates to 18% once the £5 monthly fee is taken into account.
Darren Cook, of comparison site Moneyfacts.co.uk, says: 'The card has innovative features and will appeal to those who regularly travel abroad. People who only travel once or twice a year may not consider it worthwhile paying a £5 monthly fee.
'Remember to check the terms and conditions of the travel insurance to ensure it suits your needs.'
M&S Premium Club Mastercard also offers free family travel insurance. Membership is £10 a month and includes 48 free hot drinks vouchers a year worth up to £2.50 each, triple points on spending at M&S and periodic gifts such as a free cream tea or money-off vouchers to spend in store.

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Is my credit card plan a good idea?

2010-12-30T04:55:00.000Z

I want to buy a new kitchen. I have the money in an account and want to pay via my RBS Mastercard to have purchase protection. The credit limit cannot be raised, but I would like to load the card with enough cash to cover the £8,000 I need to spend

Are there any rules forbidding this? If I paid using a Visa debit card would I have same purchase protection as a credit card? S.R., Milton Keynes, Buckinghamshire
Simon Moon from This is Money replies: Royal Bank of Scotland say it would be possible to build up a credit balance on your credit card, but they are not keen on the idea.
I was told: 'We would not advise a customer to take their card into credit by such a substantial amount as once an account is taken into credit the funds are not protected by bank insurance.
'If the credit card was compromised or stolen, with the funds in credit not protected, we could not guarantee gaining the full customer's funds back.'
However, RBS added: 'A Visa debit card does offer the same level of protection as a credit card in terms of non-receipt of good or services.'
This last statement will come as something new for many people. The added protection has been in force for only a few months under a scheme known Visa Debit Chargeback. This allows you to reclaim money if a supplier fails to deliver or supplies damaged goods. Claims must be registered within 120 days.
However, there is a significant difference between the protection offered to credit card users and the Visa scheme: claims made on a credit card are covered by Section 75 of the Consumer Credit Act, whereas the Visa chargeback scheme is not legally binding.
Find the perfect credit card
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Credit card firms forced to play by new rules

2010-12-30T00:11:00.000Z

Millions of borrowers will benefit from major changes to credit cards that come into effect this week. But they are being warned to watch out for new fees and higher rates as greedy lenders try to claw back revenue.

Following a major investigation into the card market that began in October 2009, Labour initiated changes aimed at making card companies treat customers more fairly. These will be implemented from Saturday.
For the first time there will be a legal minimum monthly payment to help cardholders avoid never being able to clear their debt.
Minimum monthly repayments must cover at least the interest and any fees and charges, plus one per cent of the capital outstanding.
But the biggest change is that the card companies must use repayments to clear the costliest debt first.
This applies where different rates are charged on the same card, for example where a borrower has transferred a balance from another card at a low promotional rate, often zero per cent, but has then bought goods at a higher rate.
It also happens where cards have been used to withdraw cash, which is charged at higher rates than for purchases.
In the past, monthly repayments were commonly used by lenders to pay down the cheapest debt first - a process known as 'negative order of payments'. More expensive borrowing was left to roll up interest. This was more lucrative for the card issuer, and often misunderstood by the borrower.
Nationwide Building Society has always operated the fairer, 'positive order of payment' process on its cards, Saga has done so since 2008 while Cooperative Bank was quick off the mark and switched earlier this year after the Government report was launched. Virgin switched on September 1.
But other lenders have dragged their heels, squeezing as much cash out of borrowers as possible. They claim technology issues prevented them changing ahead of this week's deadline.
Card giants, including Barclaycard, MBNA and Halifax, have switched only in recent weeks. RBS/NatWest will start on Saturday. But Lloyds TSB says it won't be ready until mid-January.
Best credit cards
This is Money works out the best credit card deals and list them via these links. The advice is entirely independent...
• Best cashback credit cards
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Vicky Tuck (pictured right), 25, from Bristol, will benefit from the new payment arrangement from this week. She has had a NatWest credit card for three years.
As a self-confessed shopaholic, Vicky, who works as a researcher for a consultancy which advises on regeneration, consolidated about £1,500 of store card debts on the RBS card to take advantage of a zero per cent balance transfer offer.
After the deal period ended, the interest rate on the balance rose to 15 per cent - but the rate on new spending on the card is charged at 18 per cent.
'I have spent on the card so up to now any repayments went to the transferred balance first,' says Vicky. 'In the mean-time my purchases have been rolling up interest at the higher rate.
'It is great news that from next month that will change and I'll cut the expensive debts quicker. I can't afford to repay more than about £50 a month so the change will save me money.'
Under the new regime, consumers will also have the right to refuse credit limit increases. Lenders will also be forced to give more information about the dangers of paying back only the minimum amount each month.
Future increases to borrowing rates must also be better spelt out and the notice period for rate rises is 60 days compared with the current 30 days.
Cardholders will receive an annual statement showing the cost of their card, helping them compare it to others.
• Find the best credit card for balance transfers at thisismoney.co.uk/balance

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The best 0% credit cards for Christmas

2010-12-29T20:21:00.000Z

Christmas shoppers who need to put their presents on plastic should apply for an interest-free credit card now.

Tesco is offering 0% on purchases for 13 months and Sainsburys for 12 months. But with interest rates at 16.9% and 15.9% thereafter, experts say it is vital to pay off the balance next year.
Kevin Mountford, of comparison website Moneysupermarket.com, says: 'It normally takes a few weeks to receive your card and pin, so if you need cheap borrowing for Christmas, you should apply now. Just remember, the debt has to be repaid eventually and you don't want to be repaying what you spend this Christmas, next Christmas.'
The Tesco card also has a reward scheme, giving one Clubcard point for every £4 you spend, or two for every £2 you spend on fuel. Each point is worth 1p to spend in Tesco, various retailers, on days out or Airmiles.
Halifax, M&S and AA are offering 0% on purchases for ten months, while MBNA is offering it for nine months.
More: A full rundown of the best credit cards for Christmas spending
Those who want a more long-term rate could opt for a low-cost credit card such as Barclaycard Platinum Simplicity, which charges 6.8%, or Capital One's OneRate card at 9.9%. These cards have a low interest rate for life, without any introductory 0% deals. If you always pay off your balance in full and would like some reward for your Christmas spending, there are some good cashback deals available.
American Express offers 0% on purchases for six months and 5% cashback for three months on all spending up to £2,000. After that, you get between 0.5% and 1.25% cashback.
This means if you spent £850 a month you would receive about £180 cashback in the first year. Capital One and Egg have no interest-free period, but offer 1% cashback per year. Another card that might appeal to shoppers is the Amazon.co.uk MasterCard, which offers 0% on purchases for the first nine months and credits £10 to your account when you spend £25 anywhere in the first 60 days.
Customers also earn one point for every £1 spent at Amazon.co.uk and one point for every £2 spent elsewhere. After every 1,000 points, customers are sent a £10 Amazon.co.uk gift voucher. The Play.com credit card also has 0% for the first nine months and customers earn one point for every £1 spent anywhere and two points for every £1 spent at Play.com, with 500 points giving a £5 Play.com gift voucher.
The Asda card has 0% on purchases for three months and customers earn one point for every £4 they spend (two points for every £4 spent in Asda). Each point is worth 1p in Asda vouchers.
In the first three months, you earn four points for every £4 at Asda and two points for every £4 spent outside Asda. This means a weekly shop of £60 in Asda would get you a voucher for £7.20 after the first three months.

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Conned out of your credit card refund

2010-12-29T17:16:00.000Z

Shoppers who have lost money to scams are being denied refunds by their credit and debit card providers, a government body has warned.

Anyone who buys dodgy goods in a shop or online and is refused a refund from the retailer is entitled to claim the money back from their credit card or Visa debit card provider under 'chargeback' rules.
In some cases, people can claim if they paid with a Maestro debit card.
The rule can be a lifeline for people who have lost money to scam websites, but the Office for Fair Trading (OFT) says banks are turning down claims.
A spokeswoman for the OFT says: 'People are sometimes refused a chargeback by their bank, even when they are entitled. We are talking to banks so they meet their obligations.'
Chargebacks let payments be reversed if goods don't turn up, arrive damaged or not as described, or if the retailer goes bust.
The rule applies to goods bought for more than £100 (but less than £30,000) on a credit card under section 75 of the Consumer Credit Act.
Visa debit card holders have similar protection when a claim is made within 120 days of purchase. Maestro debit card holders have protection if they bought goods from an overseas website.
From October 15, this will include UK-based websites.
Many consumers do not realise they have protection with their debit card, but the rules are increasingly relevant as more people's Maestro debit cards are replaced with Visa debit cards.
NatWest and RBS are transferring all their 13m current account customers from Maestro to Visa debit, while 9m HSBC and First Direct customers have already been given new Visa debit cards.

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Can I claim my flight back from Mastercard?

2010-12-29T12:51:00.000Z

I have four flights booked for my family to fly to Spain with Ryanair later this month. However, I have broken my leg so I can no longer fly.

I would normally purchase insurance but not until just prior to flying.
I booked my flights using my Virgin Mastercard ? can I claim for the cost of the flights back?
Rob Watt, Luton.
Tara Evans from This is Money replies: Sorry to hear about your leg Rob. You are right in thinking that anything purchased on a credit card over £100 is protected under Section 75 of the Consumer Credit Act.
Unfortunately, this does not apply in your case as Section 75 only protects you if the companies were to go bust or if you did not receive the service you bought.
As the reason you can no longer fly is because you have broken your leg you are not protected under the Consumer Credit Act.
This kind of cancellation would normally be covered under your travel insurance but as you have not bought any you may have to forfeit the cost of your flight.
You do have the option of changing the flight details. This will, however, come at a cost.
Ryanair currently charge £25.00 per person per one way flight to change the time or date of a flight. You may find that with eight flights to change details for (4 outbound and 4 return flights) it may work out cheaper to rebook your flights altogether depending on how expensive they were in the first place.
Ryanair do not currently offer refund although they do repay Air Passenger Duty (APD) for an admin fee of £20 per booking. The standard UK APD is £11 for European destinations so you may be able to claim some of your money back minus the £20 admin fee.
For more information read our guide on changing flight details.

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Can I get back credit card fraud interest?

2010-12-29T08:13:00.000Z

In February this year, I had fraud on my Lloyds TSB Mastercard. More than £2,000 was taken over 16 separate occasions at Lloyds cashpoints.

Two months later, Lloyds sent a letter saying that I would not be liable. It was only then that it refunded me.
However, because this is a credit card I incurred interest, charged until the money was refunded. Lloyds refuses to pay back this interest.
I even enlisted the help of my MP, but I've got nowhere. B.L., Southampton, Hants.
Margaret Stone, the Daily Mail's Money Doctor, replies: The rules of the Consumer Credit Act, which applies to credit cards, are quite clear that customers are entitled to the money they have lost from transactions that are unauthorised.
Lloyds has come to the conclusion that you are not to blame, so it should refund you for the loss.
It is staggering that you have made so much effort to get this done, but it has ignored you.
It did not take long for Lloyds to put right their error once I was in touch.
It has apologised, refunded the outstanding interest of £32.62 and given you £30 as a gesture of goodwill.

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Sting in the tail of interest-free credit cards

2010-12-29T03:41:00.000Z

Borrowers are being lured by record interest-free promotional periods on balance transfers and purchases on credit cards, only to hammered by sky-high rates later.

The average interest-free period across the top best buy credit cards for balance transfer cards hit a high of 15.4 months, nearly three months longer than the average in July 2007 of 12.8 months.
The average period for 0% purchase cards has risen to an average of 12 months, up from ten months.
But, the bad news is that rates are continuing to rise, with the average rate hitting 17.32% in July ? up from 17.19% in May.
Kevin Mountford, head of banking at Moneysupermarket.com, which did the research, says: 'There is a sting in the tail to these deals that makes it even more important to ensure you pay off your balance before the interest-free period ends.'
The Platinum Credit Cards from Natwest and royal Bank of scotland are the market leaders, with 16-month 0% offers on balance transfers and a 2.9% transfer fee.
For purchases, Tesco's recently launched ClubCard Credit Card has a market-leading 13 months interest-free on purchases.

View the original article here

Do reward cards EVER pay for loyalty?

2010-12-29T00:40:00.000Z

Loyalty shopping schemes are hugely popular, with around 17 million signed up to the biggest ? Boots advantage, nectar and Tesco Clubcard ? and two million to airmiles.

But how valuable are their benefits? Here, we compare the big four, assuming that you collect rewards for a year, spend £400 a month on supermarket shopping, £100 a month on fuel and £150 a month on other purchases.
AIRMILES
There are two ways to collect airmiles. The loyalty card gives one point for every £2 spent at shell, via Tesco Clubcard, and by shopping online through airmiles' website at retailers such as John Lewis, apple and Comet.
Or you can opt for the Lloyds Duo card, which provides two credit cards: MasterCard and American Express.
You get one point for every £10 spent on the American Express card and one point for every £50 spent on the MasterCard. There's a 1,500-point bonus for every £1,000 of balance transferred.
During December, new customers are being offered 1,500 free miles, when a card is taken out and £10 is spent on the Amex card by the end of February 2011.
PERK AFTER A YEAR: You could build up 3,650 miles. This could buy one return flight to Athens or Istanbul, plus one return flight to Paris, Amsterdam or Brussels, and a day out for one to attractions such as the London eye.
BOOTS ADVANTAGE Boots gives four points for every £1 spend in Boots stores, and at least one point for every £1 spent in its internet-based Treat street.
This links the chemist with retailers such as Asos, Thomas Cook, Toys R Us and eBay, to offer extra points.
Each point is worth a penny to be spent in Boots. PERK AFTER A YEAR: You can't use this for petrol or in the supermarket. But if you spent £100 a month in Boots, plus £50 at its partner stores, you'd earn £54 of free shopping in Boots stores.
›› More on the best cashback credit cards
NECTAR
Nectar points can be collected by using its loyalty card or through credit cards providers American Express and Sainsbury's.
Using a nectar loyalty card gives two points for every £1 spent.
The nectar Amex card gives two points per £1 spent when shopping at nectar-linked retailers and one point per £1 spent elsewhere.
Nectar Amex is offering 5,000 bonus points when a new card is taken out provided £500 or more is spent in the first three months. The Sainsbury's credit card currently offers two points for every £1 spent in the supermarket for two years, and one point per £5 spent elsewhere.
You can use the nectar loyalty card at the same time, as these credit cards to boost the number of point you earn.
Extra points can be earned by shopping via nectar's online store with retailers such as Argos, Gap and House of Fraser and using its yahoo! Search engine. It's iPhone app gives extra bonus offers.
PERK AFTER A YEAR: Using the credit and loyalty cards together could earn 33,660 points, getting £168.30 off in Sainsbury's and other retailers, or £336.60 with double points partners such as ask.
›› Tool: See the details on rewards and rates on a variety of cards
TESCO CLUBCARD
Tesco Clubcard gives two points per £1 spent at Tesco. shoppers can take out a Tesco credit card and get an additional one point for every £4 spent anywhere.
Clubcard holders get discounts on Tesco insurance policies. Points are redeemed as vouchers, with 250 points equalling a £2.50 voucher, and can be used for money off at Tesco or with partners such as airmiles, Pizza express or various theme parks.
PERK AFTER A YEAR: 13,706 points would give £137 off shopping at Tesco. Vouchers are worth three times their face value with some partners.

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MBNA rapped for credit card debt tactics

2010-12-28T20:07:00.000Z

Credit card group MBNA has been ordered to improve the way it deals with customers struggling to keep up with debt repayments.

The Office of Fair Trading has imposed a series of requirements on the lender after Citizens Advice raised concerns about the way its in-house debt collection arm was handling customers in financial difficulties.
The trading watchdog found when people who could not afford to make their full repayments offered to pay a token sum, the letters MBNA sent to them were so unclear, consumers often could not tell if their offer had been rejected or accepted.
It also failed to follow its own policy on some occasions, by bypassing customers' appointed representatives, and instead contacting individuals directly.
As a result of the investigation, from January 1 MBNA must make it clearer in letters sent to customers who are in financial difficulties that it will accept partial repayments if they have shown that this is what they can afford to pay.
It must also stick to its policy of only contacting customers who have an appointed representative to act on their behalf if the customer or representative has given permission for this, or if they have confirmed that the representative no longer acts for the customer.
The group may also contact customers directly if an expected payment has not been made, or it has been unable to get in touch with the representative, despite making reasonable efforts.
It can continue to send statements of account or other communications to customers in line with its statutory obligations.
Ray Watson, director of the OFT's consumer credit group, said: 'Our investigation found problems with the way MBNA communicates with customers in financial difficulties.
'MBNA has agreed that it will make its debt collection letters clearer and clarify its policies and procedures for dealing with appointed representatives.'
The OFT added MBNA had co-operated fully during the investigation and was in the process of addressing the issues. If the group breaches any of the requirements it can be fined up to £50,000 and even have its consumer credit licence revoked.
An MBNA spokesman said: 'As a result of ongoing dialogue with the OFT, we have agreed to deliver greater transparency in some of the communications we have with our customers in financial difficulties.
'We believe these changes are enhancements to our existing strong practices. We are in the process of implementing them now.'

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M&S card fault ruined my holiday in US

2010-12-28T16:31:00.000Z

While on a £6,000 holiday to the US I found my Mastercard, issued by M&S Money, was repeatedly rejected at hotels, restaurants and leading attractions including theme parks and a Las Vegas casino.

I spent $200 [dollars] on a phone call to get help, but was told many other M&S Mastercard users were having a similar problem.
When I returned home M&S Money wrote to me claiming there is no problem with their Mastercard in the US. D.C., Bournemouth, Dorset
Simon Moon from This is Money replies: Before setting off on holiday you contacted M&S Money to tell them when you would be in the States and you cleared your account so you would have £4,000 to use.
I can imagine your dismay and frustration as your card was rejected time and time again ? you have sent me a long list of the venues where you ran into difficulties.
The M&S Money Mastercard is issued by HSBC. Ironically, you were carrying a separate HSBC Mastercard, which worked fine, but as you had not anticipated using this card, you had to be cautious and you were forced to resort to carrying enough cash to cover the bill if your M&S card was refused.
You say when you phoned M&S Money (at a cost of more than $200) asking for help, they tried to blame you, claiming you had not told them you were going to the US.
When they found out you had warned them, they said the problems were with communication difficulties with US merchants.
Eventually, you say, call centre staff admitted there was a widespread problem with the M&S card in the US, so there was nothing that could be done to remedy your situation.
Your email to me ends: 'My holiday (costing £6,000) was ruined by the failure of M&S Money to give me a Mastercard which worked in the US as I had to stick to the cheapest restaurants and was afraid to buy anything in case my M&S Mastercard was rejected. I don't want other people to have the same problems.'
I spoke to M&S Money who admitted there was a glitch, but insisted retailers could have got round the problem. I was told: 'We are sorry Mr C had difficulties with some of his transactions while he was in America. We have investigated these transactions and had the retailers/merchants in question followed the correct procedures the transactions could actually have been processed manually.
'We have received a small number of similar complaints and as part of our investigations into these, we have identified that in a very small number of cases, some transactions are not automatically approved in America due to incorrect coding held on the magnetic strips of some cards.
'It is important to stress that if the merchants/retailers follow the correct procedures in situations like this then the transactions will not be declined. This anomaly does not impact any retailers/outlets/ATMs which require the customer to insert their Pin number.'
M&S Money added: 'We are currently working hard on fixing this inconsistency and hope to have it fixed within the next few weeks.'

View the original article here

Why have credit card firms refused me?

2010-12-28T12:56:00.000Z

I want to transfer my £7,000 credit card debt to one offering a 0% balance transfer so I can get it paid off more quickly. Although my credit rating is coming up as good, I keep being refused.

I am a single parent earning around £15,500 a year. I have only applied for one card in the past six months.
Do you have any ideas as to why my applications keep being declined? D.W., Birmingham
Simon Moon from This is Money replies: I put your question to credit card industry expert David Black, principal consultant (banking) at financial research company Defaqto, who suggested you may simply be a victim of the credit crunch.
Apparently one major card supplier is declining half of all the applications it receives and he believes the decline rate may be even higher elsewhere.
Black says reasons for refusal could be other debts outstanding or the fact that you might not have been in your job for long.
He adds: 'Generally the more details that you give on the credit card application the better. For example, where it asks for contact details, give as many possible: home phone number, work phone number, mobile number, email address etc.
'My suspicion in this case is that the amount is the problem - £7,000 of debt on a £15,500 income is fairly high. The amount of credit that will be offered varies from provider to provider and some will extend more generous facilities than others.
'A conservative estimate would probably see a credit limit of about 20% of income being granted, but higher amounts may be available elsewhere.'
• Compare and apply for credit cards
• Latest news and advice on credit cards

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Are credit cards with rewards worth it?

2010-12-28T08:46:00.000Z

Credit cards offering rewards give you the chance to earn supermarket loyalty points, air miles or even just plain cash back when you spend. But are they worth it?

Credit cards with rewards can seem tempting but users need to balance the value of any rewards against higher interest rates.
The best credit cards that do not offer rewards boast interest rates from as low as 7% APR, or around 12% APR for all but those with the best credit scores.
These are significantly lower than the APR on most reward credit cards where rates tend to start from about 16% APR.
Compare the latest best buy credit cards...
But if you are using your credit card for spending and always pay off your balance then a credit card with rewards may be right for you.
New Figures from the British Banking Association show that the number of credit card purchases increased to 173m in August, compared to 169m in July and 158m last year.
At the same time, overall balances have reduced year on year, from £64.1bn in August 2009 to £60.7bn in August 2010, which suggests that while people are using their credit cards more they aren't leaving a balance outstanding.
Chris Griffin, head of credit cards at Confused.com, said: 'Customers who use their credit card as a means of spending should seriously consider the additional benefits offered by a rewards credit card. By paying for goods and services with a card that offers rewards, ahead of one that doesn't, users can earn air miles, cashback, or shopping points from their spend.'
It is perhaps best to regard reward credit cards as an alternative to spending you would normally do with cash, or a debit card. Pay the balance off in full each month and you pick up the rewards but dodge the higher interest charges.
There are a number of different cards on the market at the moment, ranging from cashback to airmiles rewards.
If you're thinking about taking out a credit card which offers rewards you should think about which one you will get the most benefit from. Some cards offer stronger deals in certain shops, while other offer BA Miles or AA points.
The best cards for cashback and rewards
We've rounded up a few of the cashback and reward credit cards available at the moment. If you want to compare the deals yourself then use our credit card finder.
AMEX Platinum Cashback
Reward: For the first three months, customers will receive 5% cashback on purchases, up to a maximum of £100. After that, they can receive up to 1.25% cashback. 0% on purchases for 6 months
Typical APR: 19.9%
Balance transfer offer: None
Contact: www.americanexpress.co.uk*
Lloyds TSB Airmiles Duo Credit Card
Reward: Collect double airmiles when you spend abroad.
Typical APR: 15.9%
Balance transfer offer: 0% balance transfer offer for 6 months, 3% fee Contact: www.lloydstsb.com*
Tesco Clubcard Credit Card
Cashback offer: Collect 1 Clubcard point for every £4 spent on Clubcard Credit Card anywhere in the world and get points as usual from shopping a Tesco
Typical APR: 16.9%
Balance transfer offer: 0% interest on balance transfers for 9 months from account opening(2.9% fee)
Contact: www.tescofinance.com* see our latest here »

* What do the starred links mean?
This is Money receives a fee if you click on the starred links. We include links to sites we do not have a commercial relationship with in exactly the same way. This income enables us to employ journalists to write bias-free analysis and to champion your consumer issues. More on our independence.

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Which credit card gives the best value?

2010-12-28T04:42:00.000Z

I know that some credit cards offer money back on your spending. Which give the best value and are there fees to be paid? M.G.

Helen Kanolik, an independent financial adviser with with PFM Associates in Poole, Dorset replies:
Two fee-free cards stand out from the pack.
The American Express Platinum Cash Back Card offers cashback of five per cent for the first £3,500 spent, reducing in stages to 1.5% on expenditure above £10,000.
You need an income of £30,000 a year to qualify.
Barclaycard OnePlus is an alternative with no restrictions on income.
This offers 0.5% on spending of up to £6,000 per month and five per cent on spending on public transport in London.
›› New cards on the market

›› Find the best credit card deal

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