Can you still find a bargain piece of plastic?

As with all things credit, plastic has become increasingly expensive to fund since the beginning of the year.

Yes, there are some good credit card deals out there, but your credit history has to be squeaky clean to land one. In the six months to end of April, market comparison research showed an increase from 16.5% to 17.12% in the average annual percentage rate (APR) on credit card purchases.

Providers have also clawed back over £3 billion worth of credit by cutting their customers' spending limits. In fact, both purchase and cash APRs, along with charges, continue to increase, with no obvious signs of a slowdown.

Increases of more than 7% on some cash rates and as much as 3% on purchase rates have been implemented. For many, the old blues lyric 'Life is just a card game' has amplified in resonance as they struggle to meet rising household bills with the aid of plastic and ponder the possibility of a 0% introductory purchase or balance transfer deal.

Can you save money by switching to another credit card? Find out with Moneyextra's comparison service.

Research published at the beginning of this month by Moneyfacts.co.uk records 22 purchase rate increases, 15 cash rate hikes and over 30 increases in charges, such as balance transfer and cash withdrawal fees and foreign usage loading.

Michelle Slade, an analyst at Moneyfact.co.uk, said: "The number of increases to purchase APRs is quite phenomenal.

"Normally, credit card providers avoid such increases as these are the rates customer see first."

"It goes to show just how tough credit conditions have become for the institutions and this is being passed onto consumers."

"Rates and charges on credit cards are only likely to continue to increase in the months ahead. If you are not happy with your current deal, make sure you shop around for a better one."

More 0% deals

Providers have tightened their credit card criteria; there's been a reduction in the number of applications accepted as well as the aforementioned increases in purchase and cash rates. Yet for those with an exemplary credit record the good financial deals are still available. If anything the magic 0% has increased its pervasiveness.

0% Balance Transfer Cards

In mid 2006 (remember those days when credit was cheaper and a lot more easy to obtain?) there were 58 cards offering 0% introductory purchase rates for up to 10 months and 82 cards advertising 0% balance transfer deals of up to 12 months' duration, according to Moneyfacts data. Now, two years and a severe credit crunching on, it's been reported that these numbers have respectively increased to 85 and 99 and the timeframes to 12 and 15 months.

Competition on both balance and purchases

Competition in the balance transfer and introductory rate market was boosted again earlier this month when Capital One extended its 0% deals for both purchases and transfers to 1st September 2009. This 15 month duration for both balance transfers and purchases is rare, but an indication of the length some credit card companies will go to in order to attract new customers.

12 June 2008 © Moneyextra.com

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