Your five minute guide to… Credit cards

The number of people using credit cards have been decreasing dramatically. The Central Bank thinks it’s connected to the MBNA departure and the cancellation of inactive accounts.

Also, many people might have chosen debit cards instead of credit ones, especially after worldwide Visa and MasterCard systems were introduced. This is no good news for the government, as credit cards give it €30 stamp duty, but debit cards tax was cancelled at the beginning of the year.

Nevertheless, there are still 1.4 million people who stick to their credit cards, and the following options are for them.

BEST OPTION FOR BORROWING?
Credit cards aren’t the best borrowing variant, even if you need the money for a short period of time. The main reason for that is high interest rates most banks offer. The lowest is 13.6% interest on the Click credit card from Allied Irish Banks. AIB also has the highest rate — 22.7% for purchases with its Be card.

Bank of Ireland has a useful feature that cuts the cost of credit on individual purchases of more than €500. You can ask to transfer the debt to an instalment plan, paying it off over 12 months at a lower interest rate of 6.9%.

BEST FOR NEW CUSTOMERS?
Balance transfer deals give new customers a chance to stop digging themselves deeper into debt when they transfer a balance to another credit card provider. Bank of Ireland, Permanent TSB, KBC Bank and Tesco Personal Finance give 0% interest on balance transfers, allowing you to pay off what you owe interest-free over six or seven months. Allied Irish Banks and Ulster Bank charge less than 4% interest on balance transfers for up to a year.

You have to be disciplined, though, by cutting up your new card as soon as it arrives. Otherwise, any payments you make will be set against new purchases rather than reducing the transferred balance. The danger is this balance might not be paid off before the interest reverts to the standard rate of 20% or more.

BEST FOR PERKS?
AIB’s Platinum card pays a 0.5% rebate on spending of €5,000-€50,000 a year, with a maximum cashback of €225 a year. You must earn at least €40,000 a year.

KBC Bank also pays cashback at a rate of 1% but only on purchases made at grocery shops and online, with rebates capped at €120 a year.

Bank of Ireland’s Platinum Advantage card, which has an annual fee of €76.18, gives travel insurance at no extra cost when the card is used to pay for at least half of the cost of a trip. Tesco’s Clubcard credit card offers discounts on shopping. Customers earn one loyalty point for every €2 purchase on the card, or two points for every €2 spent in Tesco supermarkets.

BEST FOR TRAVELLERS?
Currency conversion charges can add up when using your credit card in Britain, America or anywhere else outside of the eurozone.

Permanent TSB and Tesco have the lowest charge — 1.75%. Ulster Bank and KBC charge 2%. Bank of Ireland charges 2.25%, and AIB charges up to 2.75% of purchases made with Visa cards outside Europe.
TOP TIP
It is tempting to dump a credit card if you use the credit facility, and replace it with a debit card. It can be difficult to travel without a credit card, however, because car hire companies and even hotels might refuse your business if you do not have one.