Best UK Credit Cards

A credit card can be useful in a number of different situations. You’ve got the one off emergency – that crack in the car windscreen or the broken down washing machine. Or perhaps the big treat – the holiday in the sun or the new TV. A credit card can even be used for day to day shopping. People use credit cards in many different ways. And banks provide credit cards to cater for this.

If you’re in the market for a new credit card then the best advice is to shop around. There are plenty of options out there to suit different uses. Think about how you’re going to use it, and this will help you select the card to match your needs. Credit cards vary widely in their interest rates, but this won’t be a concern if you plan on paying the card off in full each month. If you are going to use the card to borrow, then think about the kinds of transactions you’ll be primarily using, since interest rates on purchases are often different to interest rates on balance transfers. If you’re planning on using the card abroad, pay attention to any fees or charges that apply for international purchases.

So what are some of the the best UK credit cards? If you’re over 18 and have a regular income, there are many to choose from. Here are four cards that suit a range of needs:

-          Halifax One

The Halifax All In One credit card offers a good rate for both balance transfers and purchases. It’s got a 0% rate on balance and purchases for the first 13 months. This gives a lot of flexibility in transferring money and using your credit card for those big purchases.

-          NatWest YourPoints World MasterCard

This is a good one for existing NatWest Customers. It allows you to accrue points towards all manner of purchases – holidays, flights, cosmetics, books. It’s got an interest rate of 17.95%, with an introductory offer of 0% on balance transfers and purchases for 13 months.

-          NatWest student credit card

Just because you’re a student doesn’t mean you should be denied a flexible friend. Most banks offer credit cards specifically tailored toward students. This one from NatWest has an interest rate of 18.9%. It’s got a maximum credit limit of £500, which is a good way for first time credit card holders to keep in control of their finances. It’s also got a whole host of discounts on everything from DVD rentals to iPods to wine club membership.

-          RBS private card

At the other end of the scale is this card for RBS customers with a large income. The minimum income required to apply for this one is £100,000, or a £150,000 joint income. It’s got a 0% interest rate on balance transfers for 13 months and on purchases for 6 months. After this introductory period, you get a very low interest rate of 14.94% for both. The minimum credit limit is £5,000.

Whatever your circumstances, there are credit cards out there to suit your needs; it’s just a question of knowing what you’re after and where to look.

Barclays Plans Sale of Indian Credit Card Business

The news that Barclays Bank plans to sell its Indian credit card business has apparently created a bidding war with Standard Chartered Bank being currently in the lead.

Some six months after the announcement came from Barclays, the signing of a deal is now finally on the horizon, indeed, it is rumoured to take place within the next couple of weeks. The only other bidder, SBI Card, a joint venture between GE Capital and State Bank of India, is still in the running and nothing is certain as yet.

The sale and offer would, however, only comprise of Barclays’ performing cluster of some 240,000 Indian credit cards. Both private and foreign banks are becoming more aggressive in their pursuit of the credit card market and other unsecured lending. This is surprising in view of the fact the number of credit cards being issued to new account holders is actually declining. Only spending on existing cards is up on previous months and looks set to rise.

Barclays seeks to cut some 3,000 jobs world-wide to reduce operating costs and has already merged client relationship teams of its commercial and investment banking departments to cut costs. Barclays Capital, now consisting of the bank’s investment banking and commercial banking divisions, wishes to concentrate on their large corporate clientele in India, while Barclays as a whole has decided to focus on business from more affluent clients in the retail banking sector.

It appears Barclays has lost its appetite for the credit card market as a whole, a market it once aggressively pursued around the world. Unsecured lending has become a red rag to many UK banks, so it seems.

Reuters reported this week that Barclays seeks to reduce its exposure to unsecured lending in India, not surprising with a book value of approximately 2 billion rupees/26.6 million pounds that is actually shrinking and credit card spending that is rising – and therefore presenting the possibility of defaulting on the loans.

Standard Chartered is a long standing business rival of Barclays. The bidding bank has issued some 1.2 million credit cards to Indian households. In a country with roughly 1.2 billion people, the number of credit card holders is ridiculously small – a mere 18 million people have a credit card in India. However, as India’s economy is emerging from the global crisis in better shape than many of its European counterparts, one can only speculate how many card users there are likely to be in the future.

For the moment, it seems, Indian people have adopted a more sensible approach by sticking to debit cards and some 230 million people use them regularly. In a country of such gigantic geographical size and with tremendous infrastructural differences to overcome, only local Indian banks have the type of branch network needed to truly expand the credit card market.

This has been the greatest challenge for foreign banks so far and is perhaps the underlying reason, why Barclays is selling. Barclays Bank is the issuer of the Visa Black Card in the United States.

UK Inflation Rate Reaches 4.5%

A trip to the local supermarket these days is an ever increasing headache. From one day to the next basic food items might have gone up in price by as much as £0.20. When every penny counts and family budgets are stretched to the limit, news of supermarkets’ excessive profits aren’t reasons to be cheerful either.

Will the UK bank rate rise again? Will the pound devalue further against other currencies? At present it looks as if the Bank of England is a long way off from raising interest rates again and is more likely to print more money, and rumour has it among industry experts that a rate rise is not expected to happen before late 2014 or in early 2015.

It may be good news that interest rates remain at their current levels and the cost of borrowing is not going up for consumers, but it is bad news for those, who rely on their savings to supplement their meagre pensions.  So far the recovery has been weak, almost non-existent with a current growth rate for the economy standing at just 0.2%.

With high unemployment – especially among young people – and frozen salaries, there’s little chance of a speedy recovery or indeed a change in interest rate. The danger is that the fear of rising inflation will increase bad tempers over pay freezes and will spark a demand for larger pay rises. This in turn could send inflation spiralling out of control, particularly with the UK’s obsession to pay astronomically large bonuses and salaries to “city fat cats”, who have yet to show that they’re actually worth a penny, let alone their fat bonuses.

With the inflation being at 4.5% already, many households are forced to dip into their savings – or worse – rely on their UK credit cards to stretch their monthly budgets. Utility companies, greedy as ever, have warned of large price increases this autumn and winter. As a result, many UK citizens are looking to leave the UK for pastures new – those who can do so, are unlikely to return, taking their skills, savings and tax payments elsewhere to boost the economy of another country.

Is the UK a lost cause? Current inflation and unemployment rates are suggesting just that – and without confidence in the efficiency, credibility and trustworthiness of banks, there’s little chance of anyone believing governmental speeches that the UK isn’t nearly as badly off as its neighbours Ireland, Spain or Portugal for example.

Many UK citizens believe that banks have so far been able to disguise their worst excesses and that further revelations over mismanagement and downright foolhardiness are yet to surface.

Even if this is not the case, banks aren’t helping UK citizens to regain trust in the banking sector – the original culprit who caused this whole inflationary misery. Without lending to small and medium sized businesses the economy has simply ground to a halt, leaving only the bankers laughing all the way to the bank – as usual.

UK Credit Card Spending Habits

The world-wide financial crash revealed just how much British shoppers are in love with their credit cards – an unprecedented amount of debt was accumulated on UK credit cards, never mind the mortgage and other loan markets.

According to a recent survey conducted by credit reference agents Equifax, shoppers’ spending habits are influenced by their star signs. While Capricorns are apparently the worst culprits for accumulating debts of over £5,000 and then struggling to pay them back, Aries are careful with their money and hardly ever get into financial trouble on their UK credit cards.

Public holidays like Christmas and the long weekends in spring and summer are also too much of a temptation, when it comes to the average UK credit card holder. With “cheap” city break offers galore, it is hard not to use the credit card, when you’ve already had to do without the annual two week holiday thanks to a reduced family budget. UK shops in particular know how to exploit this weakness – special offers on anything from food, drink, shoes and gardening equipment like BBQs suddenly spring up everywhere, luring shoppers into spending what they haven’t really got.

This type of behaviour is virtually unheard of in Germany, where far fewer people actually have a credit card and where paying by debit card for your weekly groceries is a relatively new thing. With far fewer households having a PC or laptop at home, there’s less temptation to go on an online spending spree. Unlike UK credit card holders, who usually pay by card at their supermarket checkout, their German counterpart will pay by cash instead, thus always knowing, how much is left in their bank account for them to spend.

A recent governmental study conducted in Scotland revealed that 1 in 3 Scottish people have outstanding credit card debts. The study looks at household spending habits in 2009 to 2010. According to the survey households with an overall income of £30,000 plus were least likely to have no outstanding credit card debts (50%), while households with an income of £10,000 or less where the most likely to owe anything on their credit cards (78%). The latter probably reflects the fact that they are far less likely to have obtained a credit card in the first place, due to poor credit scoring with potential UK lenders.

Despite high inflation and continued unemployment, holders of UK credit cards continue to shop with money they haven’t really got. A significant rise in utility bills may also be responsible for people having to use their credit cards far more – it stretches family budgets just that little bit further every month.

As long as the outstanding balance is paid off in full and on time, things are rosy. Trouble starts, when a credit card holder falls ill and cannot work for a longer period of time or loses his or her job. Falling behind with just one payment can have serious consequences for UK credit card holders.

No Fee Low Rate Balance Transfer Credit Cards

These type of credit cards are becoming more and more popular now and can be handy for customers that are not able to get interest free balance transfer deals on other cards.

They way it works is that the Credit Card company will offer you a balnce transfer at a very low rate usually below 10% typically around 6.5%. There is no transfer fee which is usually in the region of between 2% and 3% of the balance. If you are transferring a lrage balance the savings on the fee can be quite substantial. Currently the best life of balance transfer card, as they are called is the Barclaycard Platinum Credit Card.. They offer a very low 6.5% on any balance you transfer. You are usually allowed to transfer up to 90% of your credit limit.

You will get the usual benefits like 0% on purchases and the APR is also typically low. These card are handy if you want to consolidate some of your other card balances to a much more competitve interest rate which will remain until you pay off the balance in full. An important thing to remember is that if you do take advantage of the 0% purchase offer is that what ever your higher rate of spending is will not be paid off until the low rate (blance transfer) amount has been paid off first. Cleary the Credit Card Company wants to make more money from you knowing that they will make bigger returns from your purchases while your balance transfer amount gets paid off over time.

Some Life of Balance Transfer Cards do actually charge a small fee like the Citibank Life of Balance Credit Card, they also have a competitive APR of 6.5% but if you are trasferring a large amount then the fee may hinder you from taking up such an offer.

0% Balance Transfer deals are still widely available so if that is what you are looking for then you will usually find Virgin Credit Card or any of the MBNA Cards will have these types of offers available. Nowdays it will depend largely on your credit history whether you are approved for these type of deals.

How we use our Credit Cards in the UK

Here are some stats reflecting on how consumers have used their credit cards during 2006 and 2007 and some more up to date statistics for 2008.

• In 2007 there 67.3  million credit card issued
• The number if personal credit and charge card holder actually fell to about 30 million which represents about 62% of the adult population in the UK.
• The average number of credit cards per per person was 2.4 with 1.6 for debit cards
• Spending on Credit Cards in 2006 in the UK amounted to £133.2 billion
• The internet has seen a four fold rise in card payments over the last 5 years.
• The average transaction value on credit cards in the UK  was £63.22

Statistical Release

Annual figures (end – 2008)

• Number of UK-issued debit cards                                      75mill
• Number of debit card holders                                             42.1 mill
• Number of debit card purchases in the UK                    5.5bn
• Number of cash machine withdrawls                               2.9bn
• Number of cheque transactions                                         1.4bn
• Number of automated payments                                       6.0bn
• Number of UK-issued credit & debit charge cards     71.3mill
• Numbet of credit card holders                                            30.2mill
• Number of Faster payments                                                 82.8mill

Barclaycard takes the first step towards reducing interest rates

Well we have all been waiting for the credit card companies to make a move over the proverbial interest rate cut line.
Barclaycard are probably the first to confirm that they will be cutting their interest rates. Before we get too excited this will however only apply to a quarter of its customers which are classed as “low risk”. The rates cuts will be in the region of 2.5% to 5%.

It seems like the card provider is trying to engage their customers more through the current economic climate by establishing a helpline for customers who may be struggling to pay back the debt on their cards. New customers will also get greatly reduced rates on Barclaycard Platinum and Barclycard OnePulse, which will see the rate of interest charged on these cards reduced to 12.4%.

Moneyfacts the comparison website revealed that 32% of the population will use their credit cards in the first part of the year. In the past a lot of people would spend on their credit cards and use their annual bonus to pay off most if not all of it, however a lot has changed in the last 12 months and with bonus pools dropping to near extinction these credit card debt balances may be around a bit longer. A cut in interest rates is a welcome relief for many, lets just hope all the other credit companies follow suit very quickly.

Amex interest rates up to 46%

Amex the popular credit card brand has increased its interest rates on one of its cards to 46%. Which in simple terms means that if you buy something for £100 it will cost you £46 in interest payments.

The British Airways Premium Plus card makes it one of the UK’s most expensive cards and is so far removed from the base rate that you would thing you are living in Zimbabwe.

There are many other cards out there that are averaging between 25% – 35% so it seems like the credit card companies are able to play their own game and charge as much as they like. The margin they are making in terms of profit is huge as the base rate is only 1.5% at the moment so the cost of borrowing for them is cheap compared to what they charge thier customers.

As the supply of credit dries up more and more people will turn to their credit cards to get by, this only perpetuates the debt cycle. There are new industry standards that have come into play which mean credit card companies have to give at least 30 days notice before increasing their interest rates. Also no interest rates increases can be made during the first 12 months of you having your card.

Interest Rates Down Credit Card Rates up!

Interest rates are now at 1.5% so why are the rates being charged by credit card companies going up.

This seems a bit unfair as clearly the Card companies profit margins are expanding in proportion with the decrease in interest rates. Reports have revealed that interest rates on average are now 18% but I am sure there are many people out there that are on rates of over 25%.

Credit Card companies have never tracked the Bank of England’s base rate so they seem to be in a league of their own. There has been a huge increase in bad debt so the credit card companies have to pay for this somehow so your increase in borrowing rates is to fund this. Credit Cards have a cap on the amount they can charge for penalties for not paying set at £12. With all this in the wash the Card companies are happy to increase their rates as with the recession looming bad debts are going rise even more.

Bear in mind this is not a blanket scenario. Unfortunately your personal credit rating comes into play aswell. Individuals will have their own rate applied depending on what risk the companies see them as. A technique in this case called risk-based pricing is applied to an individual so all rates vary from person to person.

Card companies have promised to apply “fair principles” when applying risk-based pricing giving individuals notice of changes and provide alternatives to the person affected. The new rules state that nothing can be altered for the first 12 months and there would have to be 6 month intervals between rate hikes.

You can read these rules here.