There are 11 million more credit cards in the UK than there are people* and when used in the right way our flexible friends can be
brilliant financial tools.
But fall into the traps set by providers at your peril, because if you don’t know how to use your card properly the costs can quickly mount up. So we’ve put together 10 surprising and enlightening facts about your plastic. From the weird and wacky to exposing downright rip-offs, these quirky tips could save you serious money!
1. The Royal's favourite food hall Fortnum & Mason has one of the cheapest store cards around at 15.9%, less than most credit card APRs! But the purveyor of posh goods is the exception that proves the rule and most store cards are total rip-offs, with APRs of up to 30%. You are better off buying with a 0% purchase credit card.
2. Don't pay over the odds for extended warranties as some credit card purchases include them for free. For example, Nationwide credit card customers benefit from a free 12-month extended warranty on electrical or gas purchases over £50 that already have a manufacturer's warranty of up to two years, if you register the purchase within 60 days.
3. When you apply for a credit card, it leaves a footprint on your credit record, which can make it harder for you to be accepted for credit in the future. Avoid this headache by using the Confused.com credit profiling tool, which searches the market for you, tells you which cards best suit your circumstances and those you are most likely to be accepted for.
4. You can use your plastic to pay off your overdraft and avoid interest charges from your bank. A handful of providers allow this, including MBNA. With its Platinum Credit Card you can benefit from 0% interest on money transfers to your current account for 13 months if you transfer the money within the first 90 days.
5. An enormous £63.5bn of credit card debt is owed by UK consumers (according to the British Bankers’ Association). But that is dwarfed by the total cost of the bank bailouts in the UK, estimated to be a whopping £850bn by the National Audit Office. It might have been a vote winner if the government had paid off everyone’s credit card bills and left the bankers without their bonuses.
6. Credit card providers are targeting music lovers in a bid to tap into their passion and loyalty. Barclaycard’s dedicated fan website, barclaycardunwind.com, gives customers exclusive access to gig tickets up to a week before they are released on general sale. AMEX offers a similar scheme while Egg Money World MasterCard gives gig protection to cardholders to cover your ticket cost if you can’t attend a concert.
7. Beware of fraud - never compromise your security by giving your PIN to anyone. London, Manchester, Nottingham, Romford, and Coventry are the UK’s card fraud hotspots according to fraud screening company, The 3rd Man. The least fraudulent place in Britain is Lerwick in the Shetland Islands.
8. Only a few companies own the hundreds of credit cards on offer. MBNA is the biggest UK group, providing Virgin Money’s credit card as well as a host of building society and affinity cards. It’s crucial you know which company owns your card and which other cards that company owns too, particularly if you want a balance transfer card, because you can’t move a debt within groups. So if you have a Tesco card, for example, you cannot transfer your balance to a NatWest card because they are both provided by Royal Bank of Scotland.
9. 8.1m cash withdrawals will be made today with a total value of £530m, according to Credit Action. If you make a cash withdrawal, do it with your debit card NOT your credit card. The interest charged for credit card withdrawals is usually astronomical, often up to 20%, and it starts to rack up from the next day, rather than the usual 50 days’ grace you get with purchases.
10. A sneaky practice called Dynamic Currency Conversion can leave you out of pocket overseas. At the point of payment in Spain for example, you might be asked if you want to pay in Euros or Sterling. Choose Sterling and you will be subject to a conversion rate decided by the retailer, which could be very expensive. Choose Euros and you might incur foreign usage charges of up to 3%, though a few providers such as the Post Office and Nationwide do not impose these.
*according to APACS
