Expert advice on obtaining the best credit card deal

Moving your debt to a cheaper credit card

Money Talk by David BlackBanking specialist, Defaqto

During the course of the last four or five years, credit card providers have progressively tightened up their acceptance criteria for customers.

"Quality lending" is very much their mantra and this has effectively developed a three-tier market for consumers looking for a credit card.

• If you have a good credit rating you can largely take your pick from the best deals available.
• If you are still deemed to be acceptable in terms of credit risk, but your credit rating is not top notch, then you will still be able to get a credit card. However you may find the interest rate charged is higher than the keenest rates advertised.
• As a credit status deteriorates an increasing number of consumers are unable to get credit cards.

New rules

Changes are afoot in the world of credit cards, courtesy of an agreement between the Department for Business Innovation & Skills (BIS) and the credit card companies.

The key changes are that:

• Your monthly repayment has to pay off the highest interest rate borrowing first. Previously most cards allocated repayments to the lowest rate borrowing first.
• You can reject a rate increase or a credit limit increase and you can reduce your credit limit. You will have 60 days to reject an interest rate increase, and, if you do so, you close the account but pay down the balance at the existing rate.
• There is a ban on increasing your interest rate or your credit limit if you are in financial difficulty.
• For new credit cards, the minimum repayment must at least cover interest, fees, charges and 1% of the debt.

Other changes include improved automated payment options, 30 days notice of interest or credit limit increases, a new minimum payments warning and, later this year, a new annual statement to aid easier comparison.

These changes are good news for consumers.

But there is a nagging concern that, along with a number of other changes that have affected providers' income, we may be about to enter an era where future credit card offerings become less attractive than they are now.

In short, the changes come at a cost to providers and they may seek to regain it elsewhere.

Special deals

For now, there remain some very attractive offers.

For instance, you can get a 0% introductory rate on balance transfers for as long as 17 months or a 0% introductory rate on purchases for 13 months.

Because introductory offers are often the most attractive deals, there is still a significant incentive for those with good credit ratings to change their credit card on a regular basis.

The new "positive repayment hierarchy" has lessened that incentive somewhat.

For example, it paid to use your 0% balance transfer card only for that purpose and not use it for making any purchases.

But there are still reasons to have more than one card.

This is because the longest 0% introductory purchase deal will almost certainly be from a different card than that offering the longest 0% balance transfer.

Rewards

If you can get a credit card then your circumstances will dictate the sort of credit card to select.

If you are confident that you can repay your entire balance in full every month then the interest rate charged is irrelevant and it makes sense to get a reward based credit card.

There are various types of rewards available and you can generally choose from one of four categories: air miles, cash back, points schemes or shopping rewards.

Some of these reward based cards have enhanced introductory offers.

You may find it worthwhile to review the rewards available on your existing card to see whether anything better is available elsewhere.

Charges

If you cannot repay your balance in full every month then the interest rate is of paramount importance.

If you have a balance to transfer from another card, then try and get the card offering the longest 0% introductory rate on balance transfers.

But do take account of the balance transfer fee that will be charged for the privilege of this facility.

The longest 0% balance transfer rate is for 17 months from BarclayCard's Platinum credit card with balance transfer. It charges a 2.9% fee.

Similarly, if you want to use a card for purchases then get the card with the longest 0% introductory purchase rate.

Tesco's ClubCard credit card offers the longest introductory 0% purchase rate for 13 months.

If you are going to use a credit card overseas then choose one that does not levy a foreign exchange fee on overseas purchases.

The vast majority of credit cards charge foreign exchange commission of between 2.75% and 2.99% but a number of cards do not levy such a fee.

They are Halifax Clarity, Metro Bank, Post Office Classic or Platinum, Saga Platinum, Sainsbury's Gold and Santander Zero.

Making a choice

For those with a very limited credit history the choice is considerably narrower and the so-called "credit repair" cards are the probably port of call.

Cards in this category include BarclayCard Initial credit card and Capital One Classic credit card.

It is also worth noting that at the premium end of the market a number of credit cards charge a fee in return for various incentives such as travel insurance, motor breakdown assistance and concierge services.

Some of these are very similar to the sort of incentives offered by a number of packaged current accounts.

Periodically it is worth checking your credit file with one of the credit reference agencies - Equifax, Experian or CallCredit.

You can see whether they contain any errors and to ensure that they are not financially linking you with anyone to whom you no longer have any connection.

There is a great deal of variation in the features, costs and benefits available from credit cards.

It makes sense to choose the card that best suits your requirements and circumstances.

The opinions expressed are those of the author and are not held by the NRI News Network unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent, professional advice for your own particular situation.

How to cope with financial difficulties

If you are worried about not being able to keep up with repayments on your loans, credit cards or mortgage, there is lots of help available.

For starters, you may want to take the BBC'sFinancial Healthcheck. to help you identify your financial priorities and receive tips on how to tackle them.

It also outlines how it is important to keep up to date with priority debts including housing and council tax.

The BBC's Debt Test will help you to find out how likely you are to have problems - and what to do about them.

A good place to start for help if you begin to struggle is the Citizens Advice website.

The Consumer Credit Counselling Service can also offer solutions via its online debt counselling service Debt Remedy.

With energy costs rising, take a look at our guide to where to get help with heating bills.

Groups including the Consumer Credit Counselling Service or theNational Debtline offer free, independent advice via their websites or you can speak to one of their specialists by contacting their helplines.

For up-to-date news and guides on debt issues, you can go to the BBC News website's dedicated section on dealing with debt.

Payday loans

Payday loans are being presented as a problem again.

Insolvency experts predict that more people who are short of money are going to turn to the High Street shops - and their rivals who advertise on the internet, on TV and in newspapers - for a short-term loan.

Some debt charities and consumer groups have said they can lure the unwary into taking on debt that balloons out of control.

But an official study last year said they provided a legitimate, useful, service that helped cover a gap in the market.

How do payday loans work?

Typically someone will borrow a few hundred pounds from a payday loan firm for a short time, to tide them over until they receive their next wage or salary cheque.

The borrower will usually offer a post-dated cheque to the lender to cover the eventual repayment of the money borrowed, plus interest.

The cash is often emergency borrowing to pay an urgent unexpected bill, or rent or utility bills.

How many people use them?

There are no official figures on how many people use this sort of borrowing.

But Consumer Focus estimated last year that 1.2 million people took out 4.1 million loans in 2009.

In 2008, £900m was was taken out in the form of payday loans, according to the Office of Fair Trading in a a formal review of all "high-cost" credit businesses in 2010.

But it said the value loans was growing rapidly.

Who uses them?

The OFT found that the typical borrower of a payday loan was "more likely to be a young male, earning more than £1,000 monthly, and in rented accommodation. Many are unmarried with no children".

But the borrowers are not normally unemployed or without a bank account.

They sometimes see the short-term loan as a sensible alternative to running up an unauthorised bank overdraft.

How many firms offer them?

There are thought to be about 2,000 High Street payday loan shops, some of which are part of large national chains, such as The Money Shop.

Some are also pawnbrokers as well, operating out of the same premises.

There are also thought to be more than 100 online firms offering cash too, and they are much more expensive.

Are they regulated?

Yes. Any lender, whether it be a big High Street bank or a one-outlet payday loan shop needs a consumer credit licence from the Office of Fair Trading (OFT).

What is the problem?

The loans are very expensive with very high rates of interest.

But in the eyes of the borrower that is often not relevant. What matters is the cash cost of repaying the loan.

That can be acceptable to the borrower if the payday loan is more convenient than an overdraft, or some other sort of arranged loan, and is taken for just a few days.

The problem for a borrower starts to build up quickly if he or she cannot in fact repay the loan as planned, and it gets extended, or rolled over.

The interest then builds up rapidly and can soon swamp the size of the original loan.

Should anything be done?

Despite the negative publicity surrounding payday loan firms, the OFT said these and other high-cost credit businesses - such as pawn brokers or home-credit lenders - should not have their interest charges restricted.

It concluded that they provided a useful service for some people who would not otherwise be able to borrow legitimately and who might thus be forced to borrow from illegal loan sharks.

More information is available from a series of charities about how to cope with debt problems.

CM inauguratesDistrict Administrative Complex (DAC)-cum-Judicial Complex in Mohali

Mohali, November 30
The Punjab Chief Minister Parkash Singh Badal today laid the foundation stone of the much-delayed District Administrative Complex (DAC)-cum-Judicial Complex in Sector 76 here. To be built at a cost of Rs 124 crore over an area of 7.25 acres, the complex would be built in a period of two years.

The inauguration comes at a time when the Akali Government is at end of five-year tenure.

Presently, various district level offices are functioning from various offices and the judicial complex is functioning from the community centre in Phase 3 B1 here.

Giving details of the project, a PWD official said the building of the four-storied complex would come up on 3.15 acres of land and would be completed in two years.

Bollywood legend Amitabh Bachchan pleads innocence in '1984 Massacre of Sikhs’

In a letter to jathedar (chief) Gurcharan Singh of the Akal Takht, the highest temporal seat of Sikh religion, Bollywood superstar Amitabh Bachchan, who is half Sikh from his mother’s side, has pleaded his innocence in the 1984 massacre of Sikhs in various parts of the India in which thousands of Sikhs were murdered. Along with the letter, the megastar has enclosed some photographs to highlight his family’s Sikh background.

AMRITSAR, December 1 – Taking a note of allegations of provoking massacre of Sikhs in 1984 levelled against him, Bollywood superstar Amitabh Bachchan has written a letter to the Akal Takht Jathedar, pleading his innocence in the matter.

Thousands of Sikhs were murdered across India by Congress party led Hindu mobs following  the assassination of PM Indira Gandhi.

In a letter to jathedar (chief) Gurcharan Singh of the Akal Takht, the highest temporal seat of Sikh religion, Bachchan stated that he had no role in the 1984 anti-Sikh riots.

The letter was delivered to the Akal Takht head by Shiromani Gurdwara Parbandhak Committee (SGPC) member from Mumbai, Gurinder Singh Bawa.

Talking to reporters on Thursday, the Akal Takht jathedar said that he had received the letter from Bachchan, who said that he had not instigated anyone to indulge in violence against Sikhs.

The Jathedar said Amitabh’s letter will come up for discussion at a meeting of Sikh high priests on December 5. Bachchan had handed over his letter, addressed to the Jathedar, to Bawa who is an SGPC member from Mumbai at the latter’s residence on November 28.

Along with the letter, the megastar has enclosed some photographs to highlight his family’s Sikh background. Sharing the contents of the letter, the Jathedar said Bachchan had written that he too was associated with Sikhism as his mother, Teji Bachchan, belonged to a Sikh family.

To corroborate his point, the actor has also attached the photograph of his mother Teji Bachchan and maternal grandfather Saudagar Singh, who was a “keshdhari” Sikh.

Bachchan said his family also believed in Sikhism. He dubbed the allegations against him of provoking violence as “baseless”, adding that such charges have hurt his sentiments. He admitted he had been close to the Gandhi family and had been sharing their joys and sorrows. He, however, clarified that he was in no way involved in any activity like inciting violence against the Sikhs.

The issue regarding Bachchan’s alleged role in provoking violence had come to the fore prior to the recent inauguration of “Virasat-e-Khalsa” at Anandpur Sahib. Various Sikh organisations had lodged a protest against the state government’s plan to invite the superstar to the event. Later, the Akal Takht Jathedar doused the protests by stating that no film star had been invited to the inaugural ceremony.

Meanwhile, in view of these developments, the Jathedar said they would also give a chance to the Sikh organisations, which were levelling charges against Bachchan, to present their case before reaching a decision in that regard.

Nearly 7,000 Sikhs were killed in the 1984 massacre in various parts of the country following the assassination of the then prime minister India Gandhi by her two Sikh bodyguards in New Delhi Oct 31, 1984.

Bachchan was very close to the Gandhi family at time and particularly to Indira Gandhi’s son, Rajiv Gandhi, who had recruited the then top Bollywood star to join politics. Bachchan later had a falling out with the Gandhi family.