Borrowing with bad credit

People with bad credit are becoming increasingly common in the UK, and with the huge levels of consumer debt that have dogged the UK over recent years it comes as no surprise that bad debt levels have rocketed and a rising number of individuals and households have found themselves with poor credit.

In the past having bad credit made life extremely difficult, as no lender would entertain the idea of letting someone with poor credit borrow money. This meant that those with poor credit would find it very difficult or even impossible to get anything from a car loan or mortgage to a loan or a credit card.

The good news is that things have changed over the years, and tougher competition amongst lenders coupled with increasing numbers of people with tarnished credit has means that lenders have had to start looking at filling this gap in the market by tailoring financial products to meet the needs of those with bad credit.

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Deal yourself the right credit card

The credit card market is hotting up. Three big players, Halifax, Capital One and Citibank, are introducing new deals in a bid to woo credit-hungry customers. All three cards offer something above standard deals but whether any of them is right for you depends on your circumstances and how you use your card.

If you plan to spend on your card and cannot always pay off your balance each month, Halifax's Purchase Card offers a market-leading deal. As well as a 15-month interest-free period, customers are charged 0 per cent on balance transfers for six months – although a 3 per cent balance transfer fee applies.

After the interest-free period the card reverts to a typical APR of 14.9 per cent, which compares well with the average figure of 16.5 per cent, according to MoneyExpert.com, the price comparison service.

"If you're a big spender and want to avoid counting the cost of letting purchases sit on the plastic for too long, the new Halifax card is a safe bet," says Sean Gardner of MoneyExpert.

"Of course, spending too much on your card without paying it back is a dangerous game. So big zero per cent deals on purchases can turn out to be a red herring if you end up with a large balance at the end of the special deal. A charge of 14.9 per cent on a balance of £3,000, for example, will see you pay £447 in annual interest."

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Britons Set New Low For Card Usage

U.K. consumers hit a record low for credit card usage in January, using plastic less than any other time in Britain's history, according to findings released by the British Bankers' Association.

The BBA said the amount borrowed on credit cards fell last month by nearly $657 million, or 42%, from December's total of $156 billion.

Despite a drop of $17 million in the amount of overall consumer credit outstanding, the total net lending rose by $7 billion last month, thanks to increases in mortgage originations and personal loans.

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Banks launch crackdown on fraud with new card readers

A card reader for every customer as banks clamp down on internet fraud.

A trial scheme has been unveiled to beat fraud on the internet that will see banks issuing their customers with hand-held credit card reader.

APACS, the UK payments association, will trial the next generation of fraud prevention technology, designed to safeguard consumers when buying goods over the internet, by telephone or mail order.

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