Insurance company Swift Cover has unveiled data from a new study about intended credit card usage for 2011, and it certainly makes for interesting reading. It seems that many consumers are intent on switching deals to ensure that they save as much money as possible, with inflation on the rise to levels of 3.7%, and the rise of VAT to 20% on most purchases. All of this means that we have less disposable income in our pockets, but how can savings be made and what do the statistics reveal?
Firstly, it seems that 0% balance transfer credit cards are heavily in demand by many consumers, allowing the cost of borrowing to be reduced to minimal levels, and previous outstanding debts from other cards having a grace period before repayment is due. Following on from the strain and overspending many of us endure at Christmas, these deals can offer welcome respite from the excessive financial pressure we experience in January. However, it is important to ensure that you have a strong credit rating to back up your application, as many lenders are very selective over who they give credit to as we bounce back from the downturn.
Even though two-thirds of the consumers questioned for this survey placed saving money on energy bills as of paramount importance, another vital factor was reducing the expense of using credit cards at 56%.
Creditors are lining up to satisfy the demand, and they are competing with one another for custom by offering generous deals to lure consumers. An example of such a deal allowed borrowers to enjoy a 0% balance transfer period of almost a year and a half, with a modest transfer rate of 2.9% and a £20 discount for those who were transferring more than £3,000. Of course, price comparison websites may be important for some consumers, as this exclusive offer is only available to consumers who are already with the lender in question. It seems that many banks feel that there is an incentive to offer more generous credit solutions to consumers who they have developed a trusting relationship with over the years.
Plenty of ways to save large amounts of money
However, this is just one of many ways that consumers could save money, and making a decision as significant as changing to a card with 0% on balance transfers may not be necessary.
If you want to lower the level of interest you pay on the money you borrow, simply switching to a card that allows you to build your credit simultaneously may help. As you are seen to be a responsible borrower by the creditor over time, they will send positive feedback to your credit referencing agency, meaning that you will be able to apply successfully for cards with a lower rate of interest on average. Consumers who use their credit card more frequently than others will appreciate the level of savings this can bring.
Of course, a better credit rating will also bring savings as you try to apply for secured credit in the form of large personal loans and mortgages, as these credit cards allow you to prove your credit worthiness by paying off the money you borrow in full and in a timely fashion. Sometimes, being active and having a credit card to build a reputation can be far more useful than refusing to use plastic, a technique which might make lenders anxious to offer you large levels of credit due to the inexperience on your credit report.
Alternatively, reward credit cards can allow you to be compensated for the purchases that you would make anyway. Such incentives include high levels of cashback based on the total amount of money you spend on the credit cards you have, and many of these deals include an introductory period with a higher percentage rate of up to 5%. Your savings are usually presented to you in a generous lump sum at the end of each year, meaning that you could have a small windfall to treat yourself with something nice. Other incentives that are readily available include the chance to clock up airmiles that could bring substantial discounts on air travel, and even a hearty reduction on the cost of your grocery shopping.
Innovative, safe and secure, it's easy to save money on credit cards, and if something goes wrong with a purchase, you could also save money because of how your expenditure is protected by the Consumer Credit Act, something that cannot be said for debit cards.