Credit card companies have agreed to give consumers a better deal over interest rates and credit limits.
Last year credit card companies raised interest rates on over 6 million cards for existing customers and most maximise their profits by paying off the cheapest debt first.
If your credit card company has raised your interest rates or you’ve ever transferred your balance to a 0% card and not realised that card companies currently pay off the cheapest debt first, today’s announcement is good news. The government says it’s reached agreement with credit and store card providers that will give consumers better rights in five key areas. The changes won’t be introduced until later this year and the government is planning to legislate if card companies don’t stick to this voluntary code (although with an election around the corner, that part may not happen).
Credit card interest rates are at a 12 year high and card companies raised rates for millions of existing customers.
With credit card rates so high, what can you do to save money and cut your credit card bill?
If you’ve read the headlines recently, you’ll know that some credit card companies have been raising rates for some of their existing customers. According to the UK Cards Association, over 10 million cards had their rates changed between January and October last year, with 60% seeing an increase. Talk to credit card companies and they say it only happens to customers who are perceived to be a higher risk. But the suspicion is that people who don't fall into this category are facing increases in their interest rates. So what, if anything, can you do about it?
Transferring your balance to a 0% credit card; when it makes sense and when you should avoid it.
It is still possible to get a 0% balance transfer deal, but debt experts warn it’s important to pay the balance off.
If you’ve started the year with a hefty credit card debt, you might be tempted by one of the 0% balance transfer deals on offer. Currently, the best buy tables have a handful of deals offering 0% interest for over a year. Sounds great. The problem is that credit card companies have become much tougher about who they’ll lend money to. It’s likely to come down to how good your credit record is and whether or not they think they can make any money out of you.
