How Cruel Is Your Credit Card?

[Boylie]

How Cruel Is Your Credit Card?

Report by Cliff D'Arcy

Here in the UK, adults are greatly outnumbered by credit cards. In fact, there are roughly 75 million credit cards doing the rounds, compared to around 47 million adults, which comes to about 1.6 cards each.

One major problem with all this plastic is that very few cardholders actually carry and use a card which is right for them. Let me show you what I mean with a simple comparison of the interest rates charged by a whole deck of credit cards, including the UK's cheapest and dearest plastic. I've analysed the standard interest rates, cash interest rates and cash withdrawal charges of 327 credit cards, using data from Moneyfacts. Here's what I found:

Standard interest rates on purchases

These five cards charge over 25% APR:

1. Capital One Bank Classic (29.9% APR)
2. ASDA MasterCard (28.8% APR)
3. Coutts & Co. Gold (28.2% APR)
4. British Airways Amex Premium Plus (26% APR)
5. Barclaycard Initial (25.9% APR)

On the other hand, these five cards charge under 8.9% APR:

1. Halifax Flat Rate Online (5.9% APR)
2. Capital One Bank No Hassle (6.9% APR)
3. Capital One Bank Platinum (6.9% APR)
4. Co-op Bank Platinum Tracker (8.8% APR)
5. Northern Rock Base Rate Visa (8.8% APR)

The average rate charged across all 327 cards comes to 15.5% APR, with six out of ten cards (a total of 196) charging more than this rate. This average rate is eleven percentage points higher than the Bank of England's base rate, currently 4.5% a year. Note that spending on the most expensive of these cards would cost you five times as much in interest as the Halifax Flat Rate Online card charges, so tread carefully!

Standard interest rates on cash withdrawals

To be blunt, you'd have to be completely bonkers to withdraw cash on a credit card - that's why debit cards exist! However, if you do, expect to pay sky-high charges for the privilege.

Unsurprisingly, the five expensive cards listed above also charge the highest rates for cash withdrawals:

1. Capital One Bank Classic (31.1% APR)
2. Barclaycard Initial (29.9% APR)
3. ASDA MasterCard (28.2% APR)
4. Coutts & Co. Gold (28.2% APR)
5. British Airways Amex Premium Plus (28.1% APR)

Then again, these cards charge the lowest rates for cash withdrawals, under 9.8% APR:

1. Co-op Bank Clear Visa (8.9% APR)
2. Co-op Bank Platinum Tracker (9.7% APR)
3. Northern Rock Base Rate Visa (9.7% APR)

Overall, the average cash interest rate charged across all 327 cards comes to 19.9% APR, with 169 cards (over half) charging in excess of this rate. Therefore, cash withdrawals and credit cards are an expensive combination!

Cash withdrawal fees

The average cash withdrawal fee across all 327 cards is 2% of the amount withdrawn. Although 55 cards charge 2½%, just two cards charge no cash withdrawal fees: Abbey Flat Rate MasterCard/Visa and Co-op Bank Clear Visa. So, if you regularly withdraw cash on your credit card, pick one of these two.

In addition, check what the minimum fee will be before withdrawing cash on your card, as some issuers charge more than others. Of the 327 cards analysed, sixteen charge £1.50, 211 charge £2, forty charge £2.50, and 53 charge £3. The worst of the bunch are these four, which each charge a minimum of £5: Citi AAdvantage Gold, Citi Classic Plus, Citi Online Platinum and Citi Platinum Card. So, never use a Citibank card to withdraw cash, because you'll pay a whopping fee!

Finally, if you want to be a really smart card user, switch to a card that charges you no interest on purchases for up to a year, such as these 0% cards. If you're paying interest on your existing balance, give yourself a breather by switching your debts to a 0% balance-transfer card, such as these beauties. You can learn the rules of this game in From 30% to 0% In Sixty Seconds!

More: Check out the 0% deck in our Credit Card centre | Earn as you spend with a Cashback card.

skynews

[mustaq]

credit card are doing great job i know few people who do businees with credit card , few abuse the use of which made lots people very tough to get 1

[Boylie]

yes credit card were a good idea but the problem i got with them is

your credit card got £1000 in it and in your other hand you got a £1000 cash

i bet you would think more about spending the cash than you would useing the card
but i love my credit card

[mustaq]

when i think about

my wallet at the end at de payment time it too much man which there put huge amount of interest

[Omego2K]

credit card companies are evil, since your whole life revolves around credit and you miss one payment, you're screwed for the next 5 years, good luck getting that mortgage or car. I say down with credit cards.

[nexs]

I don't have a credit card, just a debit card. I feel more safe using one of those because i don't need to keep track of payments, and I can't spend money I don't have by mistake. Also, there is only a around $25 fee just every year to have it.

[Fergal]

Credit cards are dangerous in the wrong hands. I have a card and find it very convenient. However, I'm careful enough to ensure that I don't overspend and that I can clear the balance at the end of every month. The interest rates on credit cards is very high, it is one of the most expensive forms of debts. If you need credit funding, consider getting a loan, don't use your credit card.

[imported_megamoose]

I'm always very scared of doing any online buisiness with credit cards. Theres so much talk about all this internet fraud, and I'm just scared it will happen to me. Best I just keep my money in the bank, and let it build up all the interest :P :P

And, yes I do have a firewall, spam protector, antivirus, spywaer remoer :P , but I still don't trust my computer :P

* paranoid * * paranoid * * paranoid * * paranoid *

hehe

Mark

[mustaq]

I'm always very scared of doing any online buisiness with credit cards. Theres so much talk about all this internet fraud, and I'm just scared it will happen to me. Best I just keep my money in the bank, and let it build up all the interest :P :P

And, yes I do have a firewall, spam protector, antivirus, spywaer remoer :P , but I still don't trust my computer :P

* paranoid * * paranoid * * paranoid * * paranoid *

hehe

Mark

if your worried to give your credit card number to annomous why dont u use paypal secure place to have your credit card but lots of formalities

[imported_megamoose]

if your worried to give your credit card number to annomous why dont u use paypal secure place to have your credit card but lots of formalities

yeh, I have thought about that a few times, but then again, I'm still giving out my credit card to a company. And if there was scret spyware on my computer, then it would be able to pick it up! :1eye: , and I could lose my precious money

Mark