Avoid rising credit card rates

The banks have been quietly upping the interest rates on their overdrafts and credit cards in recent months, but you don’t need to pay any more, in fact you shouldn’t be paying any interest at all.

The average credit card purchase rate is 19.1% – the highest it has been since 2001 – and up from 18.3% 12 months ago. Meanwhile, overdraft rates are up too from 15.3%  a year ago to 15.9% now – the highest rate since records began in 1995.

With the banks losing billions in payouts to people who were mis-sold payment protection insurance, it is no surprise that they are upping rates elsewhere to try and plug the gap. But, if you are using the right credit card, these rising rates shouldn’t bother you at all. There are plenty of credit cards offering 0% deals on balance transfers and purchases.

What should you do

If you are paying interest on credit card debt you should shift it to a 0% balance transfer credit card. The pick of the bunch is the Barclaycard Platinum 24 Month card – as the name suggests you pay no interest on balance transfers for two years, although there is a chunky 3.2% balance transfer fee.

If you don’t need two years to clear your debt consider the NatWest Platinum Low Fee Balance Transfer card which offers 0% on balance transfers for 13 months for a 1% balance transfer fee.

Go for the MBNA Platinum card and you can stop paying interest on your overdraft too. As well as offering 22 months at 0% on balance transfers, this card also offers 22 months interest-free on money transfers, so you can move money into your bank account to cover your overdraft and then pay if off in chunks without interest. There is a 4% money transfer fee though.

Finally, if you are planning on building up some new debt in the last few days before Christmas, or in the January sales get a 0% purchase card so you can borrow for free. The longest 0% period is offered by Halifax’s All in One card which charges no interest on purchases for the first 15 months.