Here’s a few Top Tips based on a piece that I did with Ireland AM on TV3 a couple of weeks ago. They were interested in talking about the things consumers should watch out for when deciding to get, or change, credit cards.

Check the Interest Rates - The standard rate for most credit cards is about 17-18%, but some can be higher and a few will be lower. While there are a few now that will give you 0% when you join, you should check out what the rate will be once the introductory period is over. Always ask the banks what their best rates are – you may have to get a non-standard credit card, or a card with a particular current account, to get the best offers, but it’s always worth asking.

Switching terms and conditions – check to see if any introductory 0% interest periods apply to new purchases as well as balance transfers, and check which balance is reduced first when you make payments – if it’s the interest free balance first, you could end up with higher interest payments in the longer term.
Cash Back – though not as popular in Ireland as in the UK or the US, there are credit cards that provide cash back on your purchases up to a certain amount each year. Its worth looking around to see if your bank (or any others) provide this service. The AIB Platinum Card is one example.

Ask your current provider what they can do to keep your custom - If you’re thinking about changing your credit card, remember that a lot of service providers (financial and otherwise) will be keen to keep our business in 2009. It’ll probably be worthwhile ringing all of them that you deal with in the coming weeks to see what they can do to keep your business. Just call and say you are thinking of changing your credit card provider to get a better deal and ask if they are willing to lower the interest rate (see what happened when I did just this in January).

Don’t forget about the Credit Card tax – You should remember that by default you’ll end up paying the ridiculous government credit card tax twice if you change your card during the year. You’ll be charged once when you close your old card, and once again on the new card – €30 too much tax for you to pay. Get a “letter of closure” from your old provider and send it to your new one to let them know that you’ve already paid the tax for the current year.

Do you need credit card insurance? – You are most likely going to be offered Credit Card Payment Protection Insurance when you open a new credit card account. As with all insruances, evaluate the risk of you being unable to pay your debts at all in the future. If you always expect to keep a large balance on your account, it might be worthwhile, but if you always pay off your card at the end of the month, then you might not need it. If you have it, don’t cancel unless you are sure you don’t need it but you may be paying for it when you don’t need it!

Switching terms and conditions - If you have a credit card, but you’re thinking of changing provider, make sure you check to see if any introductory 0% interest periods apply to new purchases as well as balance transfers. You should also check to see which balance is reduced first when you make payments – if it’s the interest free balance first, you could end up with higher interest payments in the longer term.

Cash Back Credit Cards – Though not as popular in Ireland as in the UK or the US, there are credit cards that provide cash back on your purchases up to a certain amount each year – maybe 1% on purchases up to a maximum each year. Its worth looking around to see if your bank (or any others) provide this service. The AIB Platinum Card is one example.

Other Credit Card Freebies – If you’re finding that the choice of credit cards is pretty much the same – same interest rates, same minimum payments and so on, dig a little deeper to see if you can get some extra free stuff as well. Some credit cards come with free travel insurance, or in one case, free access to airport lounges around the world. Don’t let these blind you when it comes to the real issue of the interest rate, but if it’s 50/50 as to which card to get, it could help you make the decision.