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According to statistics in a recent survey, less than half of those who apply for a credit card shop around at all. They either accept the card offered by their bank or another organisation, or they fall prey to an advert that lands in their post box. Is that any way to find the best credit card deal? The question is rhetorical, obviously - but what's not rhetorical is the need to do a bit of homework before you apply for a card. The wrong choice can cost you thousands of pounds over the course of a few years. Some wrong choices jump right out at you. If you can qualify for a low interest credit card, you'd be a plumb fool to apply for one with an APR of 34%. Keeping your eye on the average typical interest rates can help you avoid applying for cards that offer outrageously high interest rates. Other times, though, it's not so easy to recognize which to avoid. As often as not, it's a matter of using a perfectly good credit card for the wrong purpose. Low interest balance transfer cards are a good example. Most people are drawn to these because of the low APR on transferred balances. They usually carry a higher rate of interest on new charges to your card. They also usually apply your payments to the balance transfer first. That means that until your transferred balance is paid off in full, any new purchases that you put on the card will sit and accumulate interest - on which you'll pay interest. Bottom line: avoid using a balance transfer credit card to make purchases. Store cards offer some of the highest interest rates of all types of lending. Those high APRs are often hidden behind a special offer - pay for your purchase on a store credit card and get no interest for three months, or until the end of the year. Be careful to read all the fine print on those offers. It's not unusual for the no interest to be contingent upon having the balance paid in full by the end of the interest free period. If it's not, you could find yourself whacked with the entire interest from the date of purchase. Other things that may invalidate a no interest store card offer include late payment, going over-limit or missing a payment. Bottom line: Avoid using a store credit card unless you use it for a special promotion - and abide by all of the stated terms. If you make it a practice to research credit cards before you apply for one, you'll be able to spot which ones to avoid on your own. Comparison sites make it easy to compare credit cards and find the best deal - and the ones to avoid.
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