Credit Card Debt Traps
Posted February 16th, 2009 If you’ve had a look through Credit Card Finder, you’ll have seen loads of great credit card deals, combining low APRs, long 0% balance transfer offers and generous cash back schemes. These cards are designed to catch your eye, and although you’ll never find a truly ‘cheap’ credit card, most APRs are fairly affordable.
The big gotcha is that credit card companies can change the APR of the card as and when they see fit. This is where the word ‘variable’ becomes massively significant.
The Credit Card companies will generally change the interest rate of Credit Cards due to changes in economic circumstances. That being said, they can change the rates as they see fit. This is one trap to be very wary of.
Imagine you got a new card with a low rate, and over time you sensibly spend money on it, generally making your payments on time. Credit Card companies will then increase your credit limits. You should ignore this, but sometimes it’s difficult to mitigate with all those zeros staring you in the face,
So just say you do splurge a little on your credit card, and build up a sizable debt over time, and then one day you miss a payment. Say you forget, when you remember you pay straight away, also covering the late payment fee, and you think nothing further of it. That is until you receive a letter from your Credit Card company telling you that they’ve increases your APR by 10 points! Suddenly your minimum payment no longer covers your debt, and, unless you can balance transfer, you’re stuck with that higher rate.
Find this difficult to believe? Well, this very story is happening to people all over the UK. While it sounds unethical, it’s completely legal, and unfortunately there’s not much you can do about it.
The only solution is to keep your limit as low as possible, and make sure you have a plan for making your payments on time always.
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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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