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Credit crunch causes credit card chaos

Credit crunch causes credit card chaos

Category: Credit cards

Updated: 31/10/2008
First Published: 05/11/2007

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Exclusive research by Moneyfacts.co.uk has revealed that in the last two months, no less than 125 fee and rate increases have hit the credit card market.

Credit cards have been hit hard by rising charges, in particular increased cash withdrawal fees and rates, higher foreign usage charges, higher balance transfer fees and increased purchase rates. Many credit cards have also introduced a combination of these fee and rate increases.

The credit crunch is starting to cause credit card chaos, with 125 credit card fee and rate increases inside two months, it's quite staggering. With the majority of increases staying away from the headline credit card purchase rates, these fee and rate increases are often tucked away in lengthy credit card terms and conditions. However they can still make a substantial increase to the cost of using your credit card.

Avoid taking cash from your credit card unless you absolutely have no choice. Interest rates average 23%, and are charged from the date of withdrawal. Also expect to pay a fee of up to 3%. Would you still withdraw £500 on your credit card if you knew that by making only the minimum repayments (2.5%, min £5) you would repay a total of £1382.70. That's £882.70 extra in interest over a term of 20 years and 4 months?

Don't just keep to the minimum repayments on your credit card, take control of your debt and repay as much as you can afford each month. Doing so will knock years off your credit card debt and save you a fortune in interest.

Following a year of rising rates and fees, its time to take a look at your credit card. Check the interest rate you are paying, as there are still some great 0% deals on purchases and 0% balance transfers to be found.

Don't pay interest unnecessarily - choosing the wrong card can be a costly mistake. With almost 300 credit cards to choose from, there is plenty of choice, so use our credit card Best Buys as your first point of call.

Related best buys:
- 0% Balance transfers
- Foreign usage
- Introductory rates for purchases
- Standard rates

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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