Don’t be ripped off by your credit card – there are better deals around

The trouble with many of the credit cards that offer 0% on balance transfers is that it doesn’t then pay to use them for purchases.  The reason is that when you make monthly repayments, these are offset against the lowest charging balances first – the 0% balance transfer – and you continue to pay a higher rate on new purchases.

One of the few credit card providers which offsets monthly repayments against the highest charging items first is Nationwide and it is launching a new Gold Card offering 0% on balance transfers for the first 15 months and 0% on all new purchases for three months.  When you do start to pay interest the charge is 16.9%. With this new offer, customers could save £264 by transferring a balance of £1,500 from a card charging interest of 19.9% to a Nationwide Gold credit card.  There is a fee of 3% of the amount transferred.

‘The Nationwide Gold Card offering 15 months at zero per cent on balance transfers is a good offer, and is up there with the best deals on the market, with only Yorkshire and Clydesdale able to top it,’ commented Kevin Mountford, head of banking at moneysupermarket.com. 

‘However, what gives Nationwide's product the edge is its positive payment hierarchy. This means that once your three months of zero per cent on purchases is over, your repayments will be automatically allocated to the most expensive debt, a big bonus for people who intend to use the card for the odd purchase as well as transferring a balance. In addition to this, the card is also perfect for using abroad as it is commission free on foreign purchases and cash withdrawals within Europe, unlike many other cards on the market.’

Meanwhile as the holiday season approaches it could be time to apply for a new credit card which doesn’t levy the ubiquitous ‘foreign transaction charge’ typically 2.75% to 3% on all purchases and cash withdrawals made abroad.

Saga calculates that the over 50s spent around £4billion with their credit cards abroad last year. With the typical overseas transaction fee at 2.75% that means that over £100 million could now be saved by the over 50s by switching to a card offering no overseas transaction fees.

Saga Platinum Card is one of the few that charges no foreign currency fees anywhere in the world.   It is also worth noting too that Saga bucked the industry trend for increasing standard interest rates by reducing its rate from 15.9% on purchases to 11.9% in April 2009.  The card also offers customers 0% on purchases made in the first nine months which makes it more competitive than Santander and the Post Office - and 0% on balance transfers for nine months as well.