Apply for Credit Cards
Posted January 21st, 2009 If you’ve decided to apply for a credit card there are some things you need to watch out for before filling out that information. Credit cards, used wisely, can be a valuable financial tool but there are some little tricks and unfair practices that can also make a credit card your worst enemy.
Recently many credit card issuers have cut back on the minimum payment allowable on a balance. Formerly, they demanded at least three to five percent of the balance as a minimum payment but now a few of them have reduced that amount to 2%. This is definitely not cause for celebration! At that rate, if you carried a balance of one thousand pounds and made that minimum payment it would take you 33 years to pay it off, assuming your interest rate was 18.9%. By adding just ten extra pounds to your minimum monthly payment you could pay that balance of in just six years and save 2,193.23 pounds in interest! So if the card you’ve decided to apply for has a very low minimum payment, do yourself a favor and either pay more than the minimum or avoid carrying a balance.
Cash withdrawals can also cost you dearly. Recent changes in card issuers’ terms mean that not only are you charged a fee of 2-3% of the amount you withdraw but you pay higher interest on that cash. How high? Typical interest rates for cash withdrawals can run as much as 35%! So if you need cash, it’s best not to use your credit card to get it.
When you apply for a credit card, be sure you know what the APR, or annual percentage rate, is going to be on that card. Many credit card companies have increased their APR’s as well as their cash withdrawal rates, for present cardholders as well as prospective ones.
Another pitfall you may encounter when applying for a credit card is negative payment hierarchy. Let’s say you have transferred a balance from one card to another with no interest or very low interest with an eye to paying it off. If you make another charge with the intention of paying that charge in full at the end of the billing cycle you may think all is well. But since your card has a policy of negative payment hierarchy, that payment is applied toward the balance you transferred that has little or no interest applied to it. The company has now reduced the debt that is the cheapest for you and saddled you with debt that is accumulating a high amount of interest. You can avoid this trap by making sure of the terms and conditions of your card and strictly abiding by them.
You must also watch out for unfair practices regarding interest. If you intend to pay off your balance each month but accidentally underpay, your credit card issuer may just charge you interest on the entire amount, not just the outstanding balance. Be very sure to accurately pay your bill!
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Comparison of Top 10 Credit Card Offers
| Credit Card | Card Details | Interest Rate | Cash Advance Rate | Balance Transfer Rate | Annual fee | Interest free days | ||
|---|---|---|---|---|---|---|---|---|
 Halifax All in One Credit Card |
The Halifax All in One credit card offers a great introductory rate, and is perfect for saving you money now as well as in the future. | 15.9% APR | 27.95% p.a. (variable) | 0% for 9 months | No Annual Fee | 59 Days interest free |
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 Virgin Credit Card |
As well as a great rate, the Virgin Credit Card comes with:
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16.6% APR (variable) | 27.9% p.a. (variable) | 0% for 16 Months (2.98% fee on balance transfers) | No Annual Fee | 50 days on card purchases |
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 Capital One Classic Visa |
This card is designed for people with bad credit ratings, this is why the rate is quite high. |
Typical 34.9% APR variable | 34.9% APR | 34.9% APR | No Annual Fee | 56 days for purchases. 0 days for balance transfers and cash. |
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As well as earning Flying Club miles which you can spend on brilliant rewards like flights, upgrades, car hire and more, a Virgin Atlantic Credit Card gives you up to 46 days interest free on card purchases. |
17.9% APR typical rate | 20.9% p.a. (variable) | 0% for 6 months (2% handling fee) | No Annual Fee | Up to 46 days on card purchases only. |
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The Virgin Prepaid MasterCard from Virgin Money is a prepaid Mastercard that you can add funds to, and use these funds for normal purchases. |
N/A | N/A | N/A | N/A | N/A |
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5% cashback on purchases in your first three months (up to £4,000 of spend). Thereafter, earn 0.5% on the first £3,500, 1% on £3,501 to £10,000, and 1.5% after £10,001. |
18.9% p.a. | 27.9% p.a. | 18.9% p.a | No Annual Fee | 56 days for purchases. 0 days for balance transfers and cash. |
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Vanquis Visa Card is designed for people with no credit history or who have previously had bad debt. Representative 39.9% APR (variable) |
Representative 39.9% APR (variable) | 39.9% | N/A | No Annual Fee | Up to 56 days on card purchases only |
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The award winning prepaid card with no credit check or bank account needed. | Funds in your Account will not earn interest | Prepaid only - N/A | Prepaid only - N/A | £59.40 p.a. (£4.95/month) | Prepaid only - N/A |
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