Ditch these rubbish credit cards - NOW!

Credit card interest rates have hit a 13 year high; is it time for you to ditch and switch?

13. Unlucky for some, but not the credit card industry.

That’s because credit card interest rates are at their highest levels in 13 years, soaring 2% in the past four months to 19.1%. Figures from moneyfacts.co.uk show that, despite the Bank of England base remaining at a record low of 0.5%, no fewer than 18 credit cards have had their rates upped since the turn of the year.

So to help you ensure that you’re getting the best possible deal on your credit card, I’m going to outline some real rip-off accounts and show you where to find the cheapest deals...

Store cards

High interest store cards are a pet hate here at lovemoney.com. Yes, 20% off your purchase just to take out another credit card may seem like a good deal initially – but you’ll be regretting saying yes to that charming cashier when your first bill drops through the letter box and you see the extortionate interest rate you’ve been paying.

Just look at some of these huge APRs...

Source: moneyfacts.co.uk and lovemoney.com

Granted if you always pay off your bill in full every month then you won’t have to worry about these extortionate interest rates at all. But even if you do always clear your credit card burden before interest starts to accrue, there’s still no excuse to use a store card. Instead, get hold of a cashback card, which will allow you to earn as you spend. American Express is currently offering 5% cashback (up to a maximum of £100) for three months and 1.25% after that on their Platinum card.

And huge APRs aren’t the only reason why you should avoid store cards; some of them have an even nastier sting in the tail. Find out more by reading Why the worst credit cards just got worse.

Cards with fees

Whether debit or credit cards, I really struggle to get my head round why anyone would want to pay for the privilege of holding an account. Especially when there are so many great deals around that don’t charge a fee and some accounts that will even pay you for your custom.

Take a look at some of these fee charging accounts...

Source: moneyfacts.co.uk

Ludicrous!

In my book, anyone that takes out an account that charges should have a very good and well calculated reason for doing so. For example, if you’re a frequent flyer who spends a lot on credit but always clears the bill every month then the air miles you stand to earn by using the BA Amex Premium card may just outweigh the £150 annual fee.

But then again, there are other air miles cards you could get that don’t charge a fee and still offer competitive rates. The Lloyds TSB Airmiles Duo will give you one Airmile for every £1 spent for three months and then one Airmile for every £10 spent after that. While the regular BA Amex card offers one BA mile for every £1 spent, with 3,000 bonus miles when you spend £500 in the first three months.

Other high interest cards

As I mentioned earlier, the average credit card interest rate has soared recently with banks upping rates left, right and centre in an attempt to hedge against risky customers stretched by the financial squeeze.

That’s why it’s never been so important to keep tabs on your APRs and ditch and switch if they start to look a tad high. Looking at the cards that charge an above-average rate of interest, it quickly becomes apparent many providers have lumped for a 19.9% rate. In my opinion this is far too pricey, especially when there are so many 0% cards knocking about.

So if you are currently stuck with a rubbish, high interest card, take a look at these cheaper options....

Best balance transfer cards

0% balance transfer cards are great for taking your debt and holding it at an interest-free rate allowing you to spread out repayments without taking on any extra charges.

Here are the best balance transfer cards around at the moment...

As you can see, Barclaycard currently has the market-leading deal with a whopping 20 month 0% deal. Just remember you will have to pay a fee when you make the balance transfer. This is usually around 3%, but, as we reported earlier this week, even with the fee, you’ll still only be a couple of percentage points of interest out. And what’s more Barclaycard are currently cutting £10 off fees for customers who make a balance transfer of £2,500 or more, reducing the overall interest even further.

Best cards for purchases

Balance transfer cards are really only geared up for those customers who already have substantial amounts of credit card debt. If you want to make purchases using the plastic you should go for one of these cards...

As well as offering lengthy 0% periods on purchases, the Tesco and Sainsbury’s credit cards will also allow you to earn extra Clubcard and Nectar points to spend in store.

But remember, when taking out any 0% card – be it a balance transfer or purchase deal – make sure you clear the debt before the interest free period ends or alternatively get hold of another 0% card, shift your debt again and start rate-tarting!

More: Compare credit cards at lovemoney.com | The best credit cards for summer | More power to your credit card!