Credit Card Rate
Posted February 2nd, 2009 A credit card rate, or interest rate, is one of the most important considerations in choosing a credit card. There have been quite a few changes recently in credit card rates, some people reporting that their rates have been nearly doubled with no warning or reason.
Interest and fees are how banks and other financial institutions make money through lending. A credit card is essentially a loan that you can pay off every month or stretch out over several months or even years. You can see how it would be to your best advantage to pay off the balance each month but when you can’t, you are charged a rate of interest on the balance that depends a lot upon your past credit history and your credit score. Fees can also be applied to that balance in order to service the account.
One of the reasons that interest rates are so high is that issuers are trying to recoup losses they’ve been suffering during the recent global recession. Others have packaged up their credit card debts and sold them to speculators, losing billions of dollars in the process. Increased interest rates are a way of compensating for that loss. With delinquencies higher than they’ve been in a decade banks are raising their fees and rates accordingly.
Another reason a credit card rate may rise is the way companies assess their customers. Once you’re accepted and are issued a card, the company begins to track your spending habits-how much you borrow, whether you miss or are late on payments and even the type of merchandise you buy. For instance, if you charge fifty pounds per month but about twenty pounds of that was spent at a liquor store, your credit card issuer won’t care that you have to entertain business clients or that you’re having a large family gathering. They only see that you’ve apparently picked up some bad habits and may pose a credit risk. Thus, your credit card rate increases.
The good news is that as of January 1st, there are new rules for credit card companies. One of the fair principles instituted is that nothing can be changed in your contract for the first twelve months. After that the rate can change only every six months and you must be notified of the impending interest rate. This is a big step in favor or beleaguered consumers!
If you want to avoid high interest rates be sure to carefully compare credit cards before you apply. Do not apply for several at a time, as this will lower your credit score. Never make a payment late or miss one altogether and try to pay your balance in full each month. Carefully read the terms and conditions of the card you decide to get before applying for it! You may change your mind once you read their rules. You would also do well to remember that credit cards are a great spending and budgeting tool but a terrible way to borrow money!
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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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