Credit Card Air Miles
Air miles have been around for many years and were amongst the first benefits handed out to credit card holders as an incentive.
It is still possible to get a credit card that offers air miles, but there are many different factors to take into consideration and the account is not suitable for everyone.
As the concept of air miles has evolved, two differing types of air miles benefits have emerged. The first kind is actually more like a frequent flyer discount, where the lender partners with an airline to offer an account that works more like a loyalty card. These cards usually entitle the holder to discounts or money off the operator that is linked with the lender. While this can be a way to get cheap flights, it can be very restrictive as only one airline can be used.
As a general rule, the interest rate for these kinds of cards tends to be slightly higher as well as carrying an annual membership fee in some cases.
It is also possible to get the more conventional kind of air miles from credit cards that do not tie the user to one airline or operator. These kinds of cards tend to provide air miles points which the account holder can swap for either miles or alternatively, use them to discount a stay in a hotel or other vacation-related costs.
The ability to scour the market for the best offers to use your air miles on offers the chance to get a better deal than those individuals tied to just one firm. Some lenders also offer air miles credit cards with no annual fee, meaning fewer charges to eat into the rewards earned.
However, despite the undeniable attraction of seeing points accumulate as you spend, air miles credit cards are typically by no means the cheapest on the market for those who need to earn money. The interest rate charged is usually in excess of the average APR offered by lenders with less generous benefits.
This is where the tradeoff occurs, so before deciding to get an air miles card, it is essential to know how you will spend on it. Especially for any card with a fee, it is a good idea to use it frequently. Some cards even attract a non-user penalty but it is an even better idea to be able to pay it off in full each month. The primary attraction for a card offering air miles is likely to be the travel discounts rather than the card itself.
It is also essential that the cardholder manages to run their account immaculately because the charges that can be levied for late payment can be substantial. Some firms will automatically erase all of the air miles on an account in return for one missed payment, regardless of the amounts involved.
The high interest rate also makes the card unsuitable for long-term borrowing. Even those with a history of bad credit should consider a loan for bad credit first as this may well work out cheaper. Credit cards offering air miles continue to be popular for good reason. After all, everyone loves a bargain, but it is important to balance up the potential payout and benefits gained before going ahead.
Credit Card Balance Transfer
As lenders cautiously creep back into the market post-recession, many credit card firms are offering cut-price interest rates to try to tempt new customers to sign up with them. Many lenders are even offering 0% APR for extended periods, hoping to lure credit card users from their competitors.
The abundance of deals on the market mean it is more common than ever for consumers to think about switching lenders to benefit from cheaper rates. Some customers become repeated switchers, constantly moving from one provider to another as deals expire, arranging for any balances to be transferred to avoid paying interest.
By making use of the promotional deals on the market, some of which last as long as 20 months, it is possible to pay off borrowing far more quickly as the repayments are not swallowed up by the addition of interest.
The process can vary significantly between lenders, with some online applications able to provide instant approval whereas postal applications can take a couple of weeks.
However, while switching to a different lender with either a low or 0% APR may seem to be a no-brainer, there are more things to consider than immediately obvious.
While firms may advertise a discounted APR, not all customers will qualify so before you arrange to transfer your balance, make sure you have been granted a cheaper rate.
Also, should your credit score fall between now and when the deal expires, you may not be able to get another card. Would you be happy sticking with this one in the longer term? To decide this, you will need to ascertain what their normal interest rate is. Some firms charge a much higher APR once the introductory period has passed than lenders who are not offering a limited period 0% APR.
Lenders will also charge a fee for arranging a balance transfer, usually a percentage of the amount outstanding and it is important to weigh up this cost against that of the amount of interest you will save. An additional detail to be aware of when considering cost-saving is that should you fail to make any of the monthly installments on time, or pay less than the minimum, the lender has the right to cancel the introductory offer and not only slap a penalty on you, but also the standard rate of interest with immediate effect, a move that would cancel out the savings.
Individuals who have a substantial amount owing on their existing card will benefit the most from a transfer to a lender with a better deal, but it is essential to remember to check whether the new credit card will provide a high enough limit.
Finally, having made the decision and transferred the balance, it is a good idea to close your account and cut up your card. Keeping it open is a temptation that can be too much for some people, resulting in debt on both the new card as well as the old!
The deals on the market change frequently and it can be time consuming trawling around all of the lenders looking for the latest offers. A way to speed the process up is by using a comparison site such as moneysupermarket.com which includes many big name providers as well as lesser known firms, making it far easier to find the right deal for your circumstances.