Jeff Salway: Do your sums or risk falling into credit card trap

Published on 11/11/2012 00:00

AS CHRISTMAS looms ominously into view you can expect to see more adverts for credit cards alongside the already ubiquitous payday loan promotions.

You can also expect, unless you’re among the chosen few, to be told that if you apply you can’t have any of the flashy new credit card deals hitting the market, or at least not at the attractive advertised rate.

The big trend in credit cards is for those with rewards attached, the deals with spending incentives such as shopping points or cashback. Card providers are becoming increasingly keen on them as a way of attracting and keeping the customers they want – people with clean credit records and decent disposable incomes who 
are still spending.

It’s a nice idea if you’re whacking purchases on to your credit card anyway, but you have to be very careful with reward cards. The obvious danger is to avoid letting the reward tail wag the credit card dog. Some of the rewards on supermarket cards in particular are meagre to say the least, so it’s not worth using the card merely in the hope of rewards.

Many also have above-average interest rates, making them expensive for borrowers unable to clear their balance each month. Some have minimum cashback levels which means borrowers get nothing back unless they spend that amount, while on certain cards, borrowers who go over their credit limit or fall too far behind on repayments lose the cashback feature altogether.

There’s an obvious appeal to reward cards and many people will be tempted to apply for one over the coming weeks as they ramp up their Christmas spending. As with any financial product, however, ask yourself why providers are so keen to offer what seems to be such a good deal.

So while a decent reward card could save you money on your Christmas shopping, make sure you’re not snared by the industry’s well-laid trap.

Deadline looms for landlords

TIME has just about run out for landlords to comply with the new Scottish tenancy deposit scheme. Some 35,000 deposits totalling more than £23 million have already been paid into the scheme, but it is believed that millions of pounds in deposits have yet to be accounted for.

Landlords have until Tuesday to pay any deposits received from tenants on or after 7 March 2011 and before 2 October 2012 into one of the scheme’s three providers. Any deposits taken since 2 October have to be paid into the scheme within 30 working days of the beginning of the tenancy.

Those that fail to do so could face hefty fines or even court action.