Wrong credit cards cost Brits £120m

Some three million Britons are paying £120 million a year too much in interest by choosing the wrong credit card.

Figures from moneysupermarket.com show that almost half (48 per cent) of credit card holders mainly use their credit card to make purchases – but just one in nine chooses their card as it offers low interest rates on buys.

Additionally, while just six per cent of cardholders use their plastic to transfer balances, more than twice as many (15 per cent) look for the best balance transfer deal when changing providers.

And even those who do transfer balances often undermine their choice.

One Briton in ten uses the same card for both balance transfers and new purchases. This is a problem as most card providers use money paid back by a cardholder to reduce the interest-free balance on the card, leaving the new spending accumulating interest at the full rate.

"Credit cards offer an easy and appealing payment solution, but not being savvy about how to use them can cost consumers a lot of money," said Rob Kenley, head of credit cards at moneysupermarket.

"It is important to work out why you need to use a credit card and in turn, seek out the appropriate one to match your needs.

"Don’t be taken in by the headline rates on offer because the cheapest deals do not automatically signal that the card is right for you.

"As always, when it comes to financial products a bit of planning and research will help you minimise the risks of paying more than you need to." XXX