Interest Rates
If you are like the vast majority of the population and you usually carry a substantial balance forward each month, then the interest rate you pay has to be your main consideration when you are looking for a new card. However, you may want to consider taking out a personal loan to consolidate all your debt in one go as this can be far better value for money.
This will again depend on your individual circumstances; even though credit cards generally incur higher interest charges than personal loans or secured borrowings (see mortgages and re-mortgages), their major advantage is the flexibility that they provide.
Interest Free Period
If you only have a small amount to repay each month on your balance and you pay it off in full each month, by paying the balance off each month you will not usually pay any purchase interest, unless you have a low-interest card which charges you interest from day one.
Purchase APR
The APR is the rate you will pay on all balances due to goods or services you have put on your card. It is usually calculated from the day the purchase is made, therefore if you do not repay your balance in full, you will instantly be charged interest, as well as for each day after this.
Balance Transfer Rates
A Balance Transfer is when you get offered a new credit card with a lower interest rate or no interest charges and you move your balance over from your old card, so you will then pay no interest on that balance for as long as the offer lasts.
Cash Advance Interest Rates & Charges
We recommend you don't take cash advances unless it is a last resort, as you will be charged an even higher interest rate than normal, and you will have to pay the cash advance handling fee.
Cash back rewards and other incentives
If you usually pay your balance off in full each month, then interest rates are unlikely to be an issue, providing you select a card which gives you an interest free grace period. As all retailers have to pay their credit card clearing companies a percentage of every sale, cash-back cards allow them to share some it with you.
These cards range from straightforward cash award programmes, such as Capital One Circle Rebate and American Express Blue, through to supermarket loyalty point credit cards. There are also more comprehensive membership reward programmes on offer, such as Air Miles and American Express Green.
