Credit Cards Are Better Than Ever

According to a recent report, credit cards now offer more value for money than ever before. We take a look at how they've improved in recent years.

As a young adult in the late Eighties, I learned the hard way about credit cards. I obtained my first cards when I went up to university, then proceeded to spend on them recklessly. Sadly, I made three glaring mistakes:

1. I didn't pay off my bills in full every month, so I paid interest at ridiculously high rates - twenty-something percent a year or so.
2. I occasionally forgot to pay my bill on time, which meant paying late payment charges.
3. On occasion, I'd slip over my credit limit and then get walloped with another fine.

As a maths student, I knew how expensive my VISA and MasterCard were, but I still continued to spend freely on them. Still, you're only young (and plain daft) once!

The good news is, according to a recent report from financial analyst Datamonitor, today's credit cards offer better value than ever before. Datamonitor explains that this is because:

• Over the last five years, average APRs have fallen faster than the Bank of England base rate. Since the beginning of 1998, average APRs have fallen by 4.5 percentage points, from 20.1% to 15.6%. Over the same period, the base rate has fallen by 3.75 percentage points.
• Most card issuers offer low introductory and balance transfer rates to new - and, at times, existing - cardholders. These reduced rates didn't exist ten years ago, but now all but 2% of cards offer initial special-rate deals.
• Annual fees - once standard - are now increasingly rare. Over the last ten years, the proportion of cards charging annual fees has fallen from four out of five (80%) to less than one in fifty (2%).
• Cards offer more perks, such as cashback, loyalty schemes and free insurance cover.

So, the naughty individuals who frequently borrow on their credit cards are paying less interest and, even better, can switch their debts to 0% cards. Nevertheless, the sensible way to use credit cards is pay off your bills in full every month, don't pay annual fees, and earn as you spend.

Here's more great advice on making the most of your plastic:

• How To Turn £5,000 Into £11,782
• Credit Card Tricks Exposed!
• How To Use A '0% Forever' Credit Card
• Turn Nasty Cards Into Nice Cards!
• Beat Nasty Card Tricks!
• Weapons Of Money Destruction!
• Britain's Most Expensive Credit Cards
• Cunning Credit Card Conduct

And don't forget you can find a better card in our Credit Card Centre.