What Lenders Don't Tell You About Introductory Offers

Article Written By: JonRobson

Even limited research on credit cards will enable you to discover that they are one of the most expensive forms of debt, far more expensive than a personal loan, for example, and if you choose to pay only the minimum amount every month you could be paying a great deal of money to borrow a small amount. However, it is possible to use credit card introductory offers to your advantage, although the process of andquot;credit card offsettingandquot; has become more difficult in recent years as lenders get wise to serial card applicants. The good news is that you don't need to be a financial whiz kid to save money with your credit card - the following tips can help you get the best out of credit card introductory offers.

Most personal finance advice sites and debt organisations are in agreement that credit cards are the most expensive form of debt but with careful money management many consumers use credit card introductory deals as key part of their financial planning. There are even those who manage to use the almost mythical technique of credit card offsetting (where you make all your normal purchases on a credit card and then use the money saved to invest in a high interest bank account), although this requires an enormous amount of self-discipline to avoid credit card charges, let alone to make a profit. Before signing up for your credit card it pays to be aware of how to use introductory offers sensibly - here's our guide to the four most important factors to bear in mind.

Firstly, beware of 0% balance transfers! Banks and other lenders have got wise to andquot;credit card tartsandquot; that continually swap between balance transfer offers; some lenders will charge a transfer fee. Others may even refuse your card application if you have taken advantage of their 0% credit card introductory offer in the past. Swapping cards too frequently to take advantage of 0% on balance transfers could even affect your credit rating as lenders are able to assess the number of credit searches against your name.

Use 0% on purchases wisely. Many credit card companies offer 0% on any purchase for a limited period - MBNA Platinum, for example, are offering 0% purchases until March 2008 while Barclaycard Premium are offering a 3 month period with 0% interest on purchases. Careful spending and again, restraint, can enable you to make big savings here - especially if you are planning to make any large purchases within the contracted period. Be aware though that this many not include cash back - so use your credit card for purchases and then withdraw cash on your debit card if you want to avoid charges.

Credit cards can be an extension of your lifestyle. While 0% balance transfers and 0% on purchases are the main incentives for many lenders there are also a huge variety of other credit card introductory offers, often specific to a particular card. Some are designed to appeal to your lifestyle choices - Barclaycard OnePulse, for example, has tied in with the Oyster Travelcard so you only need one card for travel and shopping while the MBNA WWF card makes a contribution to the World Wildlife Fund for every card. Other cards appeal more directly to your pocket offering discounts and special offers at specific retailers - Virigin Credit Card offers discounts at the Virgin Megastore andamp; Virgin Holidays while Egg offers up to 10% at selected retailers. If you already spend a great deal of money at a specific retailer included in a credit card introductory offer then it gives you the opportunity to make potential savings.

For most of us the bottom line is going to be the APR. Unless you're prepared to dedicate time and energy to highly efficient managing of your credit - certainly worthwhile, but not generally how most of us spend our time - then the most important factor in deciding on which card to choose will be how much will it cost us to borrow money on this credit card? Rates vary but are typically between 14.9% to 16.9% although Capital One are offering rates as low as 9.9% with their Platinum card. Whichever card you choose, it's important to remember that you will get the best out of your credit card if you manage your spending carefully and pay off your outstanding balance in full every month.

About the Author

Jon Robson, a freelance writer with an inquisitive outlook on personal finance - in particular the uk credit industry - suggests that before you next use your credit card you should check the introductory offers from at least one other leading uk credit card company.

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