Wednesday, January 09, 2008

Making The Most Of Credit Card Introductory Offers

By Jon Robson

Even limited research on credit cards will enable you to discover that they are one of the most expensive forms of debt, far more expensive than a personal loan, for example, and if you choose to pay only the minimum amount every month you could be paying a great deal of money to borrow a small amount. However, it is possible to use credit card introductory offers to your advantage, although the process of "credit card offsetting" has become more difficult in recent years as lenders get wise to serial card applicants. The good news is that you don't need to be a financial whiz kid to save money with your credit card - the following tips can help you get the best out of credit card introductory offers.

Even limited research on credit cards will enable you to discover that they are one of the most expensive forms of debt, far more expensive than a personal loan, for example, and if you choose to pay only the minimum amount every month you could be paying a great deal of money to borrow a small amount. However, it is possible to use credit card introductory offers to your advantage, although the process of "credit card offsetting" has become more difficult in recent years as lenders get wise to serial card applicants. The good news is that you don't need to be a financial whiz kid to save money with your credit card - the following tips can help you get the best out of credit card introductory offers.

Switching too frequently between credit cards to take advantage of 0% balance transfers can result in a negative affect on your credit rating. Many consumers are still under the impression that you can switch between credit cards at will and never pay a penny in interest. Alas, lenders are wise to this and have taken measures to prevent it. Firstly, many credit card providers will charge a balance transfer fee; others may refuse your application if you have previously used 0% balance transfer offer - and an application refusal can be a black mark against your credit rating. Lenders are also able to asses the number of credit searches that have been made against your name - they may refuse credit if there have been too many searches.

Many credit card introductory offers also include 0% on any purchases for a limited duration. Barclaycard Premium for example offers 3 months at 0% while others like MBNA Platinum fix the period on a specific date (in their case 0% on purchases until March 2008). However, it's worth finding out if the card you're interested in offers 0% on cash back. If not then you need to be aware that while it's convenient, it's not the same as using a cash point - every time you get cash back on your credit card you are borrowing money and will therefore be liable for interest on the cash. If your card doesn't offer 0% on cash back then it makes far more sense to use your debit card to withdraw cash.

Credit cards can be an extension of your lifestyle. While 0% balance transfers and 0% on purchases are the main incentives for many lenders there are also a huge variety of other credit card introductory offers, often specific to a particular card. Some are designed to appeal to your lifestyle choices - Barclaycard OnePulse, for example, has tied in with the Oyster Travelcard so you only need one card for travel and shopping while the MBNA WWF card makes a contribution to the World Wildlife Fund for every card. Other cards appeal more directly to your pocket offering discounts and special offers at specific retailers - Virigin Credit Card offers discounts at the Virgin Megastore & Virgin Holidays while Egg offers up to 10% at selected retailers. If you already spend a great deal of money at a specific retailer included in a credit card introductory offer then it gives you the opportunity to make potential savings.

Don't forget the APR! Cynical observers might note that credit card introductory offers are simply their to distract consumers from looking too carefully at the amount of interest they will have to pay every month - for most people it should be the primary consideration in how they decide on which credit card to choose. Rates vary but are currently between 14.9% and 16.9% on average - while Capital One are offering 9.9% with their Platinum card. Whatever card you choose there is one single piece of advice that will save you money: pay off your outstanding balance every month. That way you will only ever reap the benefits of credit cards with none of the expensive charges.

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