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.

Government Borrowing Rises in the UK

The latest figures from the Office of National Statistics show that UK government borrowing rose in August to £15.9 billion. This figure, the highest for August since records began in 1993, has been put down to a fall in income tax and sluggish growth. The International Monetary Fund has put public sector net borrowing at £52 billion for the year. While this is 7% lower than a year ago, it is not performing as well as the government would like, and August’s figures suggest the country is not on course to eradicate the budget deficit by 2015, as the coalition had hoped. This increase in borrowing follows on a promising July, in which the country achieved a surplus of £2.4 billion. However, with this new rise in borrowing, the International Monetary Fund has revised its 2011 growth forecast for the UK from 1.5% down to 1.1% and for 2012 down from 2.3% to 1.6%.

The UK budget deficit is the political and economic topic of the moment for the coalition government. The deficit is the difference between what the government takes in tax receipts and what it spends on public services. Since the UK is currently spending more than it is taking, the shortfall must be made up through borrowing. This obviously increases the size of the national debt, which now stands at approximately £940 billion. This is roughly 61% of GDP and costs £43 billion every year to service. While the Labour government ran a surplus between 1998 and 2001, the budget has been in deficit ever since, taking a sharp nosedive due to the financial crisis. The current state of the deficit is largely due to the unprecedented spending in 2008 of £500 billion on rescuing the banks.

The British Chambers of Commerce (BCC) has been advising the government to change tack on their austerity programme in order to stimulate growth and cut spending further. Today at the Labour party’s conference, the shadow chancellor Ed Balls promised that a Labour government would balance the books with tough rules on public spending, and suggested cutting VAT to encourage growth. He has also recommended paying off the national debt with money generated through the sale of bank shares. However, Prime Minister David Cameron is sticking to his guns, insisting that the current austerity programme will see the country out of the doldrums it is currently in, rejecting the idea that the government’s current policy is choking off the recovery. This is in spite of the fact that most economists agree that the government will not meet the target set by the Office for Budget Responsibility of reducing national debt to £122 billion by the end of the year.

Monthly borrowing figures are volatile, and it is too early to suggest that this rise in borrowing for August will have long-term consequences for the government. But with the Labour conference taking place now, the opposition is sure to seize upon these figures to mount a serious challenge to the government’s plans for getting the UK out of the mire.

Bank of England Ponders Stimulus

The Monetary Policy Committee of the Bank of England have been considering a fresh round of stimulus measures to inject some life into the recent sluggish growth of the UK economy. While the committee voted against such measures, their broaching of the topic has been interpreted as a clear sign of a step towards a new stimulus package. The Office of Budget Responsibility has said that recent UK growth has been lower than forecast, and it may just be a matter of time before the Bank of England takes action.

If the Bank of England goes ahead, then quantitative easing will be the most likely measure they will take. Colloquially known as ‘printing money,’ quantitative easing is where the Bank of England buys gilts from banks by creating new money. This raises the banks’ excess reserves and lowers the gilts’ yield. The effect is to expand the quantity of money that is in the economy, which should make it easier for banks to lend. It is a last-ditch attempt to influence growth when more traditional monetary policy is no longer effective.

The possibility of a renewed programme of quantitative easing has already seen effects in the markets. The interest rate on gilts dropped to below 3% and there was also a drop in the pound’s trade-weighted index. In the US, the Federal Reserve has already given the green light for a round of quantitative easing, and the City seems to believe that the UK will follow suit.

The aim of quantitative easing is to increase growth, and this was achieved in 2009 when the Bank of England pumped £200 billion into the economy and boosted growth by 2%. However, some economists dispute this figure, arguing that it is impossible to tell what effect the first round of quantitative easing had, since we do not know what growth would have been like without it. Sceptics argue that printing money is a risky venture, citing runaway currencies in countries like Zimbabwe and post-war Germany. A more measured fear is that quantitative easing can lead to an increase in inflation without any concomitant increase in growth. Also, there is no guarantee that banks will lend money. If they don’t pass on the new money, then the measure will not stimulate growth.

While the Monetary Policy Committee of the Bank of England have considered a new round of quantitative easing, only one member of the committee, Adam Posen, voted in favour. There are other options. The Monetary Policy Committee also considered, for example, cutting interest rates below the current 0.5% . It looks like, for the time-being at least, the Bank of England is sticking with the current programme. However, most economists see quantitative easing on the horizon, with a Reuters poll of City economists returning a 75% chance of the Bank of England taking action before the year is out. Certainly, if the Eurozone crisis continues and if oil prices continue to fall, quantitative easing may be the Bank of England’s only option.