Interesting information about credit card offers

Credit card companies want your business and they will flirt with you by offering special offers for opening an account.

Teasing you with 0% offers and cash backs certainly seems attractive, but are the card companies really flattering to deceive?

Here’s a guide to the main offers many credit card companies are advertising in a bid to tempt new customers:

Paying no interest

This is the bigger tempter. Credit card companies will offer you an interest free period on a balance transfer and/or any purchases you make for a limited period.

The period may vary from company to company:

• Lasting last from three months to a year or even more.
• Lasting to a fixed date
• Lasting until you have paid off the balance you have transferred

Paying 0% interest on a balance transfer is fine as you can reduce the card debt rather than just tread water paying the interest with a minimum monthly payment.

Balancing act

Do your sums before transferring a balance because the handling fee for switching your credit card debt from company to another could wipe out a proportion of your 0% interest saving.

The fee might be a fixed amount or a percentage of the amount you transfer.

Spending on your new card

Watch out that your special 0% rate applies to transfers and spending. Some cards charge a higher rate for spending if you have a 0% deal on your balance transfer.

Affinity cards

Affinity cards are credit cards linked to a charity or organisation, like a football team. They generally offer card holders extra ‘rewards’

Affinity credit cards come in two types:

• Reward cards that earn you free points that you can swap for extra benefits, like flights.
• Partner cards - often these are charities and football clubs, who pick up commission when you spend on your card.

Cashing in on your spending

Cash back cards offer you an extra incentive to spend by effectively offering you a discount on everything you buy with the card.

Most cash back cards offer a 0.5% reward – that’s 50p on every £100 you spend. Now and then, a special offer comes along that offers cash back up to 5%.

Cash back catches

Cash back cards often have attractive balance transfer offers – but stop and think before trading in your old card for something shiny and new.

Your monthly repayments on a cash back card are automatically deducted off your cheap balance transfer rate until the amount is repaid in full, leaving the more expensive interest to pile upon your purchases.

Learning some card tricks

If you want to transfer a credit card balance and collect cash back on your spending, then consider two new credit card accounts – one for the balance transfer and one for spending. That way you get the best of both worlds.

Summary

• Interest free balance transfers are a good way of reducing your debt
• Read the small print to make sure the card company is loading charges on your spending if you transfer a balance
• Affinity cards help out good causes or a special interest without any cost to you
• Think carefully before transferring a credit card balance to a cash back card