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It’s in your interest to check your credit card now

Do you know what the interest rate on your credit card is? If the answer is no, you’re not alone. But not keeping up with the interest payments once your introductory offer is over can sting you, research has found.

Nearly half (49%) of people who have taken a credit card with an initial introductory offer of 0% have found they have been charged an average of £267 in additional payments, according to switching site uSwitch.com.

This can happen with both balance transfer and purchase cards. There is a period where no interest will be paid – meaning that in the case of a balance transfer card, every penny you put in goes towards repayment of your debt.

These offers are often very enticing, and some can last as long as 40 months, which makes it very easy to forget when you may be hit by higher interest rates. After the introductory period your interest rate could jump to as high as 34.9% APR, which could be quite a shock to the system.

A staggering 82% of those who have been hit by a higher interest rate claim they took four and a half months longer to repay their balance. This, in turn, hit their household spending.

Make credit cards work for you

Credit cards can be useful but it’s always worth, as it is with all financial products, keeping your eyes open to what exactly they entail.

The first thing to know is when your introductory period runs out. The offer may run out earlier than you think. For most borrowers the interest-free period starts as soon as a customer is accepted for a card – but 20% of people think it’s when they transfer their first balance, and 16% think it only begins when the card hits their doormat. Make sure you know yours and you will be less likely to be caught out.

Putting a note in your calendar for a couple of months before the introductory period runs out means you will give yourself plenty of time to shop around for something that may work better for you. You could always transfer to another card to get a brand new deal.

Managing your credit card

If you can pay off the balance of your credit card in full each month, this is invariably the best decision. Not only will you avoid building up what you owe, you also keep your credit score healthy. Late or missed credit card repayments can seriously harm your score, which can impact the likelihood you will get credit in the future.

If you don’t plan to pay your balance back in full at the end of the month, use our Credit card calculator to work out how much interest you could end up paying based on different APRs and time periods. Remember the APR is based solely on purchases and you’ll usually pay different rates for different elements.

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