Making The Most Of Credit Card Introductory Offers

The UK credit card market is ludicrously competitive – sometimes it seems that some of the biggest lenders would even be prepared to offer you their own grandmothers just to get you to sign up. By enticing you in with incredible credit card introductory offers they hope to reap the rewards from your interest payments. However, when used wisely, credit cards – and in particular introductory offers like 0% balance transfers and 0% interest on purchases, as well as retail and travel discounts, could effectively mean that, not only can shop for free, sometimes you can even actively reduce your current spending.

While credit agencies may advise that credit card lending is the most expensive form of debt, crafty consumers who manage their spending on credit cards with care and restraint can use great credit card introductory deals to their advantage. Some even use a technique known as “credit card offsetting” where you use your credit card to buy all the goods you would normally purchase on your debit card and then place the money you have saved in a high interest bank account. However you plan to use your credit card, there are a number of tips and pitfalls to be aware of to get the most for your money.

Switching too frequently between credit cards to take advantage of 0% balance transfers can result in a negative affect on your credit rating. Many consumers are still under the impression that you can switch between credit cards at will and never pay a penny in interest. Alas, lenders are wise to this and have taken measures to prevent it. Firstly, many credit card providers will charge a balance transfer fee; others may refuse your application if you have previously used 0% balance transfer offer – and an application refusal can be a black mark against your credit rating. Lenders are also able to asses the number of credit searches that have been made against your name – they may refuse credit if there have been too many searches.

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.

That leads on to the third area to be aware of when assessing the relative merits of credit card introductory offers. Most cards offer additional rewards on top of the standard 0% on balance transfers and 0% on purchases. Some of these are designed to appeal to your lifestyle choices while others are aimed squarely at your pocket. The MBNA WWF card, for example, makes a donation to the WWF for every card so you can feel good about the money you’re spending (although it’s worth considering whether a straightforward donation might be a more cost effective gesture) while the Virgin Credit Card offers discounts on purchases through Virgin Megastore and Virgin Holidays – ideal if you’re planning an expensive holiday or make large regular purchases of CDs or DVDs.

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.

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