Do'nt use these store cards

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BASEL
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Do'nt use these store cards

Post by BASEL » Sat Apr 11, 2009 6:34 pm

There's a shocker waiting for you in retailers across the UK, as their store cards charge interest rates of up to 31% a year!

Since Barclaycard launched the UK 's first credit card in 1966, spending on our 'flexible friends' has soared. According to banking-payments group APACS, more than three in five adults (62%) have at least one credit card, on which we spent more than £133 billion in 2007.



The main problem with plastic

Although credit cards are very convenient and easy to use, they do have several stings in the tail. While useful for short-term borrowing ('full payers' can enjoy interest-free periods of up to 59 days), credit cards are unsuitable for long-term debt. This is because they charge eye-watering rates of interest: close to 17% a year for purchases and around 25%+ for cash withdrawals.

Storing up trouble

Nevertheless, when it comes to high-street robbery, standard credit cards aren't the worst offenders. Our Roll of Dishonour is headed by store cards, which are credit cards issued by retail groups for spending in their shops.

Store cards are a great earner for retailers, as they stimulate spending in a particular retail or chain, and because they charge astronomical rates of interest.

Given that the Bank of England's base rate currently stands at an all-time low of 0.5% a year, you'd expect that the interest rates charged by credit and store cards would have tumbled, agreed?

Alas, you'd be very wrong, as the following table proves:
Image

Retailers are ripping us off

As you can see, of the 29 store cards listed above, only nine charge a yearly interest rate under 20% APR. The remaining twenty cards all charge between 23.9% APR (Russell & Bromley; Marks & Spencer) and a seriously extortionate 30.9% APR for the Creation Account. Across all store cards, the average interest rate for purchases is 25.5% APR, which is close to nine percentage points higher than a typical credit card.

Retailers argue that interest rates aren't so important for store cards, because balances are much lower. However, I disagree, and am very annoyed that these rates haven't come down, even after new rules introduced by the Competition Commission in May 2007. To me, if it looks, smells and feels like a rip-off, then it's sure to be one!

So, despite the best efforts of the government to bring down the cost of borrowing, store-card users still pay interest rates normally associated with loan sharks. Frankly, we at lovemoney.com think that this store-card scandal must be stopped - with new laws to cap lending rates, if necessary. Likewise, if retailers want our business during this recession, then they'd better start treating their customers fairly right away!

Ditch and switch

The simple answer to this 'retail rate rip-off' is to pay off your store-card debts as quickly as you can. If this is going to take longer than, say, six months, then your best option is to transfer your store-card balances by using a 0% balance transfer. By moving your debts to a credit card which charges no interest for an introductory period, you can freeze your interest bill for more than a year.

My favourite Best Buy 0% balance transfer is the Virgin Credit Card, which offers 0% on balance transfers for fifteen months, with a transfer fee of 2.98% of the value of each balance transferred.

So, shoppers, I urge you to rise up. You have nothing to lose but your store cards!
To resist the influence of others, knowledge of one's self is most important.

Draw from your past....... but don't let your past draw from you

Yama, The world is changed. I feel it in the water. I feel it in the earth. I smell it in the air. Much that once was..... is lost. For none now live who remember it.

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Post by Rossco » Wed Apr 15, 2009 10:59 am

Mothercare on that list huh.....what mother they caring about?
Well you may throw your rock and hide your hand
Workin' in the dark against your fellow man
But as sure as God made black and white
What's down in the dark will be brought to the light

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BASEL
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Post by BASEL » Fri Apr 17, 2009 8:40 pm

to true, to true, any craic with you
To resist the influence of others, knowledge of one's self is most important.

Draw from your past....... but don't let your past draw from you

Yama, The world is changed. I feel it in the water. I feel it in the earth. I smell it in the air. Much that once was..... is lost. For none now live who remember it.

For all your Computer needs www.btlogic.co.uk

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BASEL
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Post by BASEL » Mon May 11, 2009 1:53 pm

I hate these credit cards!

By Rachel Robson



Choosing a credit card isn't always easy. For a start, there's far too many to choose from. And secondly, many credit cards come with sneaky strings attached.

So in this article, I'm going to highlight some of the worst credit cards available, as well as possible alternatives.

Outrageous interest rates

One of the first things you should look out for when choosing a credit card is the rate of interest it charges. Frustratingly, many credit card providers have been sneakily upping their rates recently, and many credit cards charge astronomically high Annual Percentage Rates (APR).
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One of the worst offenders is the RBS Black Credit Card which charges an unbelievable 51.8% APR. (This rate includes a £250 annual fee.)

This means if you had built up a debt on this credit card, and could only afford to pay off the minimum monthly repayment (MMR) each month, it would take you a very long time indeed to pay off the balance in full. In fact, you may find that you never manage to pay it off. Now, that's a scary thought.

The alternatives:

One alternative is to choose a 0% balance transfer card such as the Virgin Credit Card. By using this card, you won't have to pay interest on any balance you transfer for a market-leading16 months.

But if you'd prefer to have a credit card that offers a permanently low APR, you could consider signing up for a lifetime balance transfer credit card . These cards offer a low rate of interest for as long as it takes to clear the balance.

One of the best options is the Barclaycard Simplicity Visa which offers a rate of 6.8% for every balance transfer and purchase you make! Simple.

Reward your spending

If you're going to be using your credit card purely for spending purposes, you'll probably like the idea of being rewarded as you spend. So if you enjoy jetting off on holiday every year, you might be tempted by air mile rewards.

There's just one problem - this isn't always as straightforward as it seems.

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Take the Virgin Atlantic Black American Express card for example. This card allows you to collect two Flying Club miles for every £1 you spend, and you'll also be given 6,000 Flying Club miles with your first purchase. You can then use these miles towards a flight.

Sounds great, right? Well, there's a catch. Not only do you have to pay an annual fee of £115 for the card, but when you come to spend your Flying Club miles, you'll find passenger taxes and fees aren't included with the flight. Instead, you'll have to pay for these yourself!

So given that fees and taxes almost always cost more than the price of the flight itself, you're likely to find your bargain trip isn't much of a bargain after all.

The alternatives:

If you're a keen traveller and still want to use a reward credit card for flights, I think a far better option is the fee-free Lloyds TSB Airmiles Duo credit card. This card is part of the Airmiles scheme and you won't have to pay any tax or booking fees.

But my favourite card for purchases is the American Express Platinum Cash Back Card. This fantastic piece of plastic has nothing to do with jet-setting, but simply gives you cashback for spending. In the first three months, you can get 5% cashback, up to £100. After that, you can earn up to 1.5% cashback. All of which you can spend on your holiday...

Dirty tricks

One of my pet hates when it comes to credit cards is the dirty little trick known as negative payment hierarchy. In a nutshell, cards which operate negative payment hierarchy pay off the cheapest debts first, and the most expensive last.

Unfortunately many credit cards operate in this way. A classic example is the HSBC Credit Card. This credit card offers an interest-free period for 15 months on balance transfers and three months' 0% interest on new purchases. After that it charges 16.9%.

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If you only used this card for a balance transfer, it would offer a very competitive deal. But let's say you transfer your balance of £2,000 onto the card and then start using it for new purchases. You might think that if you repay everything you spend on the card before the first three months is up, you won't have to worry about paying interest. But you'd be wrong.

Instead, thanks to negative payment hierarchy, your monthly payments will go towards the £2,000 you transferred onto the card - in other words, the interest-free debt. And that means you won't have paid anything towards the new debt you've run up by spending on the card. So once those first three months are up, you'll be hit with an interest rate of 16.9% on this debt. And you won't be able to pay it off, until you've cleared the entire balance you originally transferrred. Ouch!

The alternatives:

One way to get around negative payment hierarchy is to use a credit card that has the same interest-free period for both purchases and balance transfers. And I think the Halifax All In One Mastercard is the perfect choice. This card offers 0% on balance transfers and purchases for nine months, so you'll completely avoid negative payment hierarchy. Hurrah!

Alternatively, you could use one credit card for purchases and a separate one for balance transfers. This way, the ordering of payments becomes irrelevant.

But whatever you do when choosing a new credit card, make sure you pick the right one for your needs and don't get caught out by any nasty surprises!

More from lovemoney.com
To resist the influence of others, knowledge of one's self is most important.

Draw from your past....... but don't let your past draw from you

Yama, The world is changed. I feel it in the water. I feel it in the earth. I smell it in the air. Much that once was..... is lost. For none now live who remember it.

For all your Computer needs www.btlogic.co.uk

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