Beware of the hidden costs involved in having a credti card.

Banks are pocketing billions from unsuspecting credit card owners with interest and other charges hidden away in fine print - often small enough to give you a headache if you actually try to read it.

A great many finacial institutions, including Alliance & Leicester, Abbey National, Barclay Card, MBNA, Mint, Egg,Tesco and Virgin charge 2% of any exisiting debt transferred to an 'interest free' credit card - effectively increasing your actual debt by 2%!! Whats more, in the small print, you will probably find clauses that allow they to charge you for late payments, excedding your spending limit or not paying off the debt in total within their specified period.

Many banks also charge you for duplicate statements.

When applying for a credit card, be aware that more often than not, the interest rate will probably be around twice that of a personal loan or overdraft.

Many 'interest free' credit cards WILL charge you interest on any debt you have if you are late with your monthly payment and they will normally apply the interest for the whole month not just the few days you might have been late with a payment.

If you fail to repay your monthly debt in full you might even forfieght the entire 'free interest' period - typically 56 days and interest will may be applied to the whole amount of outstanding debt.

You should also bear in mind with some credit cards that offer low interest introductory periods or introductory free interest periods that any payment recieved is used to pay of any interest free or low interest charging debt first and not necesarily any 'new' debt which might be at a higher rate of interest!!
Say you transfered £1000 of debt to a card with a 0% interest introductory rate on debt transfers and it had a regular rate of 15.9%. If you then spent £100 and sent them a cheque or other payment of £100, that would be used to reduce your transfered debt of £1000 to £900 and you would be charged the 15.9 interest rate on the £100 you had just spent. 

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