The Financial Blog

We’re well into this year’s holiday season and Fool.co.uk take a look at the best fee-free foreign exchange credit cards.

The basics of foreign exchange is that you typically pay 2 per cent to use your credit card abroad; so that’s added to whatever you spend; for example if you spent £100 then it would cost you an extra £2.

However, Fool.co.uk say there are around 6 credit cards that do not charge you for making purchases abroad.

Nationdwide and the Post Office offer 0 per cent interest on purchases for 3 months and 0 per cent interest on balance transfers for 10 months; subject to a balance-transfer fee. Abbey is different because it does not charge a balance transfer fee, although the interest-free period is just 6 months.

Head of Personal Finance at Fool.co.uk, David Kuo, says: “It started as a unique selling proposition for one credit-card provider, but cards that don’t sting customers when they use them abroad have now grown to half a dozen.”

“Charging customers for using their cards overseas is tantamount to being surcharged for using cutlery in a restaurant. It is preposterous. But it is pleasing to see six companies taking a stand against it.”

“It is a nonsense that any credit card provider should want to penalise customers when they pay for goods overseas. Card companies already make a profit on the difference between the buy and sell spread on currencies.”

“So, when you go abroad, make sure you leave your fee-charging credit card behind. After all, if a restaurant dared to charge me for a fork, I’d tell them where to stick it.”

>>Click here to compare credit cards and find the best deals on Foreign Exchange charges

84 per cent of successful credit card applications in the last 12 months were approved without customers to providing proof of their income. A staggering £17 billion worth of credit limit was approved on this basis!

These new figures from Uswitch.com reveal that the banks and credit card companies are still putting consumers and themselves at risk, and all this comes just months after the credit crunch.

UK debt is around 1.4 trillion and banks have been forced to write off £17.3 billion becuase of the bad debt credit crunch.

The annual Credit Card Affordability report from Uswitch.com revealed that 84 per cent of new credit cards, were approved with no proof of income or outgoings and the average credit limit was £3,545. This equates to over £17 billion worth of credit approved by banks and credit card companies.

Surely the most important factor in this situation is to check that the customers can actually afford to repay the credit they are taking out!? That is the basic, fundamental, cause of the credit crunch - people could not afford to make the repayments on their mortgages and all the investments that were tied up in the sub-prime mortgage market went bad. Every financial organisation involved in that process wanted it’s money returned.

77 per cent of people didn’t get their credit card from their current account provider, which makes this issue even worse. If customers had applied for a credit card managed by their bank at least there would have been access to current account information to understand the spending habits and affordability of these potential credit card customers.

Head of personal finance at uSwitch.com, Simeon Linstead, comments: “We cannot ignore the fact that the credit crunch has forced lenders to tighten their belts and reject applications that may lead to further write-offs. The fact remains that just because a consumer appears to have a ‘suitable’ credit score, it doesn’t mean they are always honest about their income and actually have the cash available each month to pay the bill. The credit squeeze will back some consumers into a corner and, in sheer desperation, people will resort to lying about their salaries as this is such an easy loophole to exploit.”

“Back in April, we uncovered that £20.9 billion was advanced in personal loans in the previous 12 months without any income checks being carried out - so this problem is not exclusive to the credit card market. Further credit checks could be a costly exercise for the lenders and could lead to a decline in the number of accepted applications.  However, it could be a small price to pay if it helps to curb bad debt write off’s and personal indebtedness.”

“We cannot ignore the fact that consumers have a responsibility to borrow sensibly, but lenders need to help the process and tighten their credit checking procedures. It is too early to say if the amendments to the Banking Code are resolving these problems but there is clearly an urgent need for watertight measures to be put in place to ensure that the banks are lending responsibly.”

I’ve just this morning received an Egg card flyer through the post and to be honest I didn’t realise how good the egg credit card is.

A few years ago, perhaps only this time last year, all a credit card had to offer was a 0 per cent deal on balance transfers or purchases and potential customers would apply but now things have changed and you certainly get a lot more than just a credit card these days - take a look at the benefits and rewards avaialable with the Egg card;

• 0 per cent on balance transfers until 1st September 2009 (conditions and 3 per cent fee apply)
• 0 per cent on new purchases until 1st September 2008
• 0 per cent for up to 5 months on balance transfers in June 2010 (2.5 per cent fee applies)
• 0 per cent for up to 5 months on balance transfers in June 2011 (2.5 per cent fee applies)
• 16.9 per cent APR Typical, Variable.

As well as that array of 0 per cent deals there are other perks with the Egg card;

• Save money when you use your Egg card with specially selected retailers like dixons.co.uk and buyagift.com find out more at www.egg.com/rewards
• 10 per cent discount on Egg travel insurance when you pay with your Egg card
• Active fraud monitoring - Egg look out for any suspicious activity on your account
• Access to your account 24/7 online and of course no paperwork if you manage your account online
• Quick and easy - apply online at Egg.com

This just goes to show credit card companies are starting to reward loyal customers with additional future benefits and ongoing rewards. Well done Egg!

>>Click here to compare Egg with other credit card offers

New rules and regulations have recently been introduced to try and stop the rip-off APRs you might have seen with store cards. Fool.co.uk say that some store cards are still charging almost 50 per cent more interest on store cards than you’d find with a credit card.

The Competition Commission introduced new regulations to oversee the store cards that charge APRs of 25 per cent or more.

So now what have all the stores done? We’ll the obvious thing, reduced the APRs on their store cards to just under 25 per cent so they’re not above the 25 per cent threshold and therefore do not need to be overseen.

It wouldn’t take a rocket scientist to think of lowering APRs and it seems as though the Competition Commission may as well not have bothered introducing such a scheme - when it’s obviously so easy for stores to dodge. This scheme has completely failed consumers.

Unsurprisingly since these rules cam into force the average store card interest rate has dropped by 0.7 per cent from 25 per cent in May 2007 to around 24.3 per cent today. Some stores have actually increased the APR charged on their store cards, here’s a list of current APRs for some stores in the UK;

Ikea 19.9%
Marks and Spencer 23.9%
Debenhams 19.9%
Oasis 24.0%
Jaeger 24.9%
Russell and Bromley 23.9%
Laura Ashley 19.9%

The worst value store cards in the UK with a mind boggling 29.9% APR;
Burtons
Dorothy Perkins
Miss Selfridge
Warehouse

I still sit here scratching my head as to why people have this from of credit in their handbags or wallets. The problem is that people are seduced into special 10/20 or 30 per cent discounts if they open a store card today etc…What they don’t realise is that the discount is instantly lost because the card charges interest at around 25 or 30 per cent!

The stores are reliant on the fact that customers will just pop in a pay for something they fancy on the store card and forget about paying it off because it’s such a small amount. This is where people often fall into problems with a credit card. All these small spends here and there soon add up and before you know it you can quite easily have a few thousand pounds worth of debt to repay.

Ed Bowsher, Savings Expert at Fool.co.uk said: “Store cards are the devil in disguise. They initially offer attractive benefits and bonuses, which can be hard to resist - but there is a downside to grabbing these discounts and deals.”

“Store card-holders should be aware of the high interest rates which come hand in hand with introductory offers - and should remember that these cards are designed to make you spend, rather than help you save money.”

“If you’ve spent on a store card and are still paying off the balance, that debt could be costing you far more than it needs to. However, by making use of a 0% balance transfer credit card, you could avoid paying any interest for up to 15 months.”

>>Click here to compare credit cards and find the best balance transfer deals today.

Even though the average standard credit card APR is increasing; see my post about average APRs on credit cards - on the other hand balance transfers are showing new signs of life according to Moneysupermarket.com

Moneysupermarket.com say that ther are now 40 credit cards with 0 per cent balance transfer deals that last for 12 months or more.

Head of credit cards at moneysupermarket.com, Steve Willey, said:  “Virgin, Capital One and Barclaycard have long been regarded as the fore-runners in the balance transfer market and again they are leading the pack, with 15 and 14 month 0 per cent deals, albeit with balance transfer fees of around three per cent.”

“Already, this month we have seen Capital One launch a 14 month Balance Transfer and Purchase offer. This week sees Barclaycard launch a 17 month 1.9 per cent balance transfer offer with a slightly lower fee of 2.5 per cent and Capital One further strengthen its position with a 15 month 0 per cent BT offer, although this is only available via moneysupermarket.com.”

“All of this is great news for consumers looking for a new credit card to transfer a balance. However, the recent tightening of lending criteria by many lenders means all but those with the most gleaming credit profiles are accepted.  As a result, the battle for the ‘best’ customers means that credit card providers are having to work harder to attract and retain them.”

Make sure you read my post on the Capital One credit card

Click here to compare balance transfer credit cards and apply online

American Express insurance services have carried out research into the lives of busy young Brits to find out if the youth of today really do have it so good. The research revealved that the young twenty-something workers in the UK work long hours and let things slip in their home lives as a result.

With very little time to focus on home life because of busy working lives, the first thing to suffer is fitness and exercise, followed by cooking time, and alarmingly 31 per cent said they are too busy to sort out their finances and do not even check their bank statements or research other financial products.

Head of American Express Insurance Services, Chris Rolland, commented: “Young working Brits have a lot of pressures and face a lot of choices in today’s busy working life. The more choices they have, the less time they end up having.”

“That’s why we offer much more than just a card. In order to accommodate for busy Brits who often feel there are never enough hours in the day, we have made the insurance process as easy as possible. For instance, our travel insurance product comes with personal assistance services and easy access online with an improved speedy claims process.”

The American Express Platinum Money Back Credit Card American Express Platinum Money Back Credit Card

• For £6.95 a month, Identity Defence is an essential service from American Express Insurance Services, designed to combat one of the UK’s fastest growing crimes
• American Express has launched three new travel insurance products to meet the varying needs of British travellers - Annual Essential Cover, Select Cover and Annual Prestige Cover
• For Brits on the move American Express car insurance finds you the best quote from its panel of 20 leading private car insurers. Free European cover offered as standard, plus that chance for up to 70% no claims bonus
• For busy spenders, the American Express Platinum Money Back Credit Card offers 5% cash back for the first 3 months
• For frequent business travellers, the American Express British Airways card offers an attractive points scheme

For more information on these and other services, visit AmericanExpress.co.uk/insurance or call 0800 587 4000

16 per cent of Brits admit they’d have to reply on credit to fund any household emergencies and alarmingly 21 per cent said they would struggle to find £100.

With only 33 per cent of people saying they have access to money for emergencies it looks as though saving for a rainy day is a thing of the past. You can always bet on 1 or 2 kitchen appliances not working at the same time, and things like microwave ovens, kettles and toasters aren’t cheap, let alone the cost of a new washing machine or fridge freezer.

This new research from Alliance and Leicester savings also revealed that nearly half of people couldn’t really afford more than £500 if they need to raise cash quickly. It’s not just the cost of household emergencies, I know my car has at least one major emergency a year, add this to the cost of MOT, servicing and new tyres and you can easily be faced with a bill of more than £500.

Manager for Savings at Alliance & Leicester, Hetal Parmar, commented: “The reality of being a homeowner means that at some point you will inevitably have to pay out for repairs such as broken boilers and faulty appliances. We would encourage people to start saving sooner rather than later to avoid a basic household emergency becoming a financial headache.”

“Compared to our research from 2005, people are beginning to build up their savings pots for repairs around the home, but there is still a long way to go. The soaring cost of living will undoubtedly mean incomes are stretched but even by just putting a small amount aside each month you can easily build up a household fall-back fund in no time.”

67 per cent of people, and I’m one of them, say they have felt the affects of rising fuel prices, food and utility bill prices over the last 12 months. Insurance premiums are also increasing.

The cost of living in the UK is stretching the average household to breaking point and the best way to cut costs is to compare prices wherever possible to ensure you get the best deals. You can easily compare insurance quotes on insurance for your car or home and also make sure you check out internet prices on goods like washing machines and fridge freezers, even a toaster or kettle may be cheaper if you buy it online!

>>Click here to compare prices on kettles, toasters and white goods!

>>Click here to compare insurance quotes online and find the cheapest deal

>>Click here to comapre savings accounts and make sure you’re getting the best interest on any savings you have.

It seems like I may have jumped the gun a bit when I said that the credit crunch hasn’t really affected the credit card industry so far…See my post about Capital One credit cards here

Moneyexpert.com say that the average standard APR has increased from 15.35 per cent in January this year to 16.1 per cent today.

This rise of 0.75 per cent is bad news for customers whose balance transfer deals are coming to an end. Moneyexpert.com say that there are 180 of the 0 per cent introductory balance transfer credit cards to choose from and the average introductory offer period is nearly 10 months.

Moneyexpert.com are warning people to thoroughly check the terms and conditions of their credit card provider because they are looking to increase charges on any balance left on the credit card when the 0 per cent offer ends.

Although the average standard rate is 16.1 per cent you might want to check if you’re unfortunate enough to have one of the 23 credit cards that charge 18.9 per cent or more.

Director of MoneyExpert.com, Sean Gardner, said: “Credit card companies continue to offer good, lengthy zero per cent deals on balance transfers, and customers should continue to take advantage of them.”

“However part of the consideration process should be the go-to rate, particularly as more and more people will not be in a position to clear their balance in full once their deal expires. As money is tight, paying off the credit card is more difficult and that means you’ll have to rely on the standard APR of your credit card provider, or of course switch again.”

I posted about this last week, see; http://www.thefinancialblog.co.uk/capital-one-credit-card-offering-15-months-at-0-per-cent/

Capital One are offering a 0 per cent on balance transfers for the best part of 15 months, so no need to worry about the standard APR for well over a year! The good thing with Capital One is that the standard APR or go to rate is just 12.9 per cent Typical APR. There is of course a 3 per cent balance transfer handling fee to take into consideration.

>>Click here to apply online for the Capital One credit card

>>Click here to compare credit cards and find the best deal to suit your needs…

With the credit crunch hitting homeowners the hardest you might expect the credit card market to have taken a simlar stumble but this isn’t the case so far…

Captial One have extended their 0 per cent credit card, offering 0 per cent on balance transfers and 0 per cent on purchases until 1st September 2009!

This is good news for consumers but should not mean that people continue spending on their card without thinking about the consequenses; every credit card bill has to be repaid. Credit card companies are continuing to increase their 0 per cent offers because they want new customers, and now looks like a good time to take advantage of this deal with Capital One.

This is a fantastic balance transfer period and will give customers the peace of mind for nearly 15 months at 0 per cent interest along with the fact they’ll only have to pay a balance transfer fee once in all that time.

The best credit card deals not so long ago were 12 months 0 per cent for purchases and 13 months 0 per cent for balance transfers, but even in the midst of the credit crunch we are seeing better deals on offer every month.

>>Click here to compare credit cards if you’re not sure this deal is right for you. Get the best offers today.

American Express is launching a new travel rewards credit card from tomorrow 22nd May 2008. The Blue Sky Card offers 1 point for every £1 you spend on the card.

The points can be used for any travel related purchase like flights, hotels, car rental, train travel, package holidays and cruise packages. If you earn 4000 points you’ll be given a £50 saving on any travel related purchase which equates to 1.25 per cent cashback.

Some of the benefits with this offer is that there are no limits on;

• The number of points that can be earned
• The length of time the points are valid
• The type of travel available for Cardmembers to redeem their points

The Blue Sky card also provides the following protection;

• Up to £200 for lost luggage
• Up to £100 for flight delays
• Up to £500 for missed flights (owing to public transport delays, accidents, transport cancellations, or car breakdown) or cancelled flights

There is no annual fee and 0 per cent on purchases for the first 6 months. Standard APR is 17.9 per cent Typical APR.

Vice President of UK Credit Cards for American Express, Tom Allder, said: “Our strategy is to reward Cardmembers on an on-going basis for their spending with us. We are continually looking for innovative ways to reward our Cardmembers.”

“We are expecting this Card to appeal to leisure travellers, who are not only looking to get best value for their travel expenditure but also want added safeguards to ensure their journey is a smooth one.”

“In today’s economic climate, people should be looking to make their plastic work for them.  With no restrictions on the choice of travel rewards, or the number of points that can be earned, we believe this credit card will be a compelling proposition for today’s travellers.”

I suppose this is a good credit card if you do a lot of travelling but to be honest there are better cards around and much lower interest rates on offer, 17.9 per cent Typical APR isn’t exactly cheap these days. Unless the travel reward points are of real use to you, personally, I wouldn’t bother with this credit card.

As a quick comparison I’ve just visited Moneysupermarket.com and found these credit cards on their credit card homepage;

Low Standard Rate Credit Cards

Barclaycard Low Rate Special - 8.8 per cent Typical APR - 56 days interest free period. >>Proceed

Capital One Platinum - 9.9 per cent Typical APR - 56 days interest free period. >>Proceed

0 per cent purchase credit cards

Halifax One Online Special - 0 per cent for 10 months - 15.9 per cent Typical APR. >>Proceed

Capital One Platinum - 0 per cent until 01/03/2009 - 9.9 per cent Typical APR. >>Proceed

So you can see from just these 4 examples above there are cheaper credit card deals to be found if you do a bit of simple research. >>Click here to compare credit cards now!