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Credit Card Hierarchy Traps
18/06/2010
UK credit card users in the UK are being trapped by payment priorities on different cards, according to a new report.
A safer way of increasing spending power for homeowners over 55 might be through an equity release plan.
A recent study by moneysupermarket.com shows that 60 per cent of UK credit card users are being caught by the "payment hierarchy trap".
People using balance transfer cards to make purchases could see a £50 spend rise to £106 in one year due to "negative payment hierarchy", says the report.
The firm’s head of banking, Kevin Mountford, explained: "Despite this issue receiving a lot of publicity over the last few years, it is still worrying that many credit cardholders still make the crucial error on their cards of using them for both balance transfers and purchases. Although many cards advertise zero per cent rates for balance transfers and purchases, the majority of cards only offer short term deals for purchases. Once this deal ends, the outstanding balance is protected and will accrue interest at a much higher APR, typically over 18 per cent."
The expert suggested that cardholders take out separate accounts for balance transfers and spending.
Homeowners who are looking for a safer way to increase their income can see how the value of their property could supply them with an additional regular income with equity release advice from ‘therightequityrelease.co.uk’
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