6 million people in the UK are dependent upon self-employment income. There are so many entrepreneurs in Britain that banks have special loan programs just to accommodate house mortgages for this group. Yet this same group of hardworking individuals falls under fire fastest during tight financial times. How does one whose income is part of the massive UK underground economy find their way through the current global recession? One way is through creative use of short-term credit. Many small business people turn a profit in their business on a seasonal basis. Often it is a case of feast or famine. Banks are not likely to loan large sums of money unsecured to business people who shelter income wisely within the structure of their shops. Furthermore proof of income is not always readily available.

A clever solution is the use of 0 balance transfers and no interest credit cards. If ones business is seasonal but overall shows strength applying for a no interest credit card could be a lifesaver. These cards charge no interest for up to 16 months. Mind you there is still a minimum payment to be made each month but that can be figured into ones monthly budget. For those already a bit in the red many cards will allow transfer of old debt to the new and still offer no interest for a set term. Often the point to consider is how to weather a financial storm.

Many United Kingdom property owners  are discovering the tremendous advantage of interest only mortgages.  These notes once referred to as balloon mortgages are quickly becoming the financial instrument of choice for UK investors wanting to diminish their tax liability. Basically an interest only mortgage requires that only the per annum interest on the amount owed is paid in monthly installments. The total amount of principal owed remains constant over the course of the loan. There are two distinct advantages to such a mortgage. First the payments are extremely low. Second all of the interest paid is deductible from income tax.  When one is using a property as an income producing investment this is perect so as to keep costs down and pocketable revenues available.

Now it must be remembered that with this type of loan there will come a day when the entire balance becomes due. At such time one must either have the cash put by to pay off the loan or remortgage the lot. The positive assumption is that the property will so rise in value as to make a refinance arrangement easy to attain. Another hopeful plus is that  should one decide to sell the property, the capital gains tax will be a lesser cost than the cost paid though the years in equity share or principal if you prefer.

Just two years ago, homebuyers were able to purchase houses with nothing down. This was accomplished through the use of 100% mortgages. In a freewheeling credit market, lenders were thrilled to reap larger overall profit, knowing that within just a few short months, the rapid appreciation of home values would protect for them their investment. That was then and this now. Today, real estate values seem to be locked into a deflationary downward spiral. Most homes are worth, on average, 20% less, according to bank assessments, than they were just 24 months ago. The days of 100% mortgages are over and will likely never return.

However, all is not grim for potential homebuyers. Yes, banks and other financial institutions are requiring minimum 10% deposits and the average deposit placed, when purchasing a new home is actually closer to 20% of the total purchase price. But, with home prices having dropped at least thirty percent across the board, homebuyers are now receiving a much fairer value. Also, any deposit placed on a home is direct homeowner equity. For example, if one were to purchase a home valued at 200,000 pounds two years ago, with 0% down and a 100% mortgage, they would have 0% equity and owe the full 200,000. With that same home priced at just 140,000 pounds and a mere 10% deposit, the amount owed is a much smaller 126,000 pounds. Using a mortgage calculator, the monthly payment drops from 1,200 pounds to just 755 pounds per month.

While it is true that the era of easy credit has passed, it is equally true that lower home prices and reasonable down payments will ensure for homebuyers a much brighter long-term financial picture.

Many people think that all a 0% credit card is good for is to trade off a balance from a high interest card to the 0% one and save a bit of money on interest. True, on a card with a balance of 5000 GBP having a 12% per annum rate the interest comes to 600 quid yearly. That 600 could be used to pay down the principle quite nicely. But what about using that 0% credit card differently? What if one were to use that card to purchase an expensive item that otherwise might have a 12 to 18% interest rate attached to it? What would that be, you wonder? A car would be one option. Home improvement would be another. In the case of the automobile, you could purchase your midlife sports car for the ten thousand and not have to pay a penny on it for up to 15 months. As soon as the free interest term on the card expired you could either acquire conventional financing for the auto or simply pay the minimum payment the card requires. Basically this would give you the world’s lowest car payment. This is a bit of a procrastination technique but when one is watching interest rates for rises and falls sometimes waiting is the best choice. Of course a car is a depreciating asset.

Suppose we use our 0% credit card for a home remodel. There things take a bright turn. You would like to fix up the old homestead but you lack sufficient equity in your home for a remortgage. If you could finance the remodel at 0% over 15 months you would have time to both create equity through the improvements and achieve equity through appreciation. Now you can qualify for permanent financing or an home equity loan. 0% interest can be a fabulous tool to bridge short term financing dilemmas. It allows you to move quickly on large purchases at low prices that might be missed while waiting on a conventional loan to be approved or to wait out short term economic trends.

In theory, considerable amounts of money in interest payments can be saved by transferring your balance from a credit card that is incurring interest charges, to a 0% on transferred balance card.

This may not, however, be the financial panacea that it seems.

When the first 0% on transferred balance cards were first introduced, the card suppliers hope that it would pull in business from their competitors, which indeed it did.

The only problem for the credit card providers was that savvy borrowers switched their balance again, before the end of the 0% period. To get around this, the banks introduced a few measures aimed at increasing their profit… at the cost of the borrowers! – We reveal a few of these ‘tricks’ here.

1) Transfer fees…

Right, these days when you want to switch the balance of you credit card, you may incur a fee to do so. Now, this fee is usually in the for of a % of the balance being transferred, and is often in the region of 2.5% to 3%. So, if, for example you are transferring £3000, then it could cost you around £90.

Always ask your providers what their transfer fees are, because some providers actually cap this amount.

2) Does The 0% Cover Purchases?

Right, this is a basic one. Does the provider offer 0% on balance transfers only, or are they willing to offer 0% on purchases as well?

3) If you get 0% On New Purchases, What Is Classed As A Purchase?

This may sound a silly question, but when is a purchase NOT a purchase???
Some lenders have pretty strict definitions of what is, and is not covered by a 0% interest on purchase offer. Check this with your card provider prior to applying. Below are a few quick examples of what may not be covered:

1) Gambling Online
2) Cash withdrawals
3) Purchase of Gift Certificates

4) Tiered Interest Repayments

This is sometimes a real stinger! – A simple explanation of tiered interest repayments is that usually your cheapest debt is paid off first. So, let’s say that your 0% balance transfers card does not, in fact offer 0% on purchases. You transfer let say, £3000. Great! That’s £3000 free of interest, for the next 12 months (For the sake of arguments, although obviously this will vary depending on your deal). So, lets say in month 1 of the new card account, you purchase £200 worth of goods. This debt will incur interest, as it is not covered by the 0% on BALANCE TRANSFERS deal.

Now, if you pay the £200 off before the end of the month, all is cool and you have cleared the debt, right? WRONG!

As stated a moment ago, most card providers clear the most expensive debt LAST… so, the £200 you pay off your bill will in fact go towards the cheapest part of your debt, namely the £3000 that is NOT incurring interest. The £200 that you used to make purchases with the card will usually stick around, incurring interest until you clear the balance in full! – See how you can incur charges unexpectedly?

5) Rate After The 0% Period.

One final thing that you should really find out, is what is the interest rate AFTER the 0% period runs out (For any interest free deal, so if you have 0% on transfers, AND on purchases, check the post 0% rate for BOTH)

You see, some 0% cards can have excessively high interest rates once the 0% period is over. This can sometimes be around the 16% mark. Check on this, and make sure you save it (in writing). If you think you won’t be able to clear the debt before the 0% interest period is up, maybe consider choosing one of the Lifetime balance transfer credit cards instead of a 0% card.

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1. Only people who are already clear of their current debt should consider applying a balance transfer credit card cards. Those of you already carrying around a large financial burden should look to clear it while minimising the interest you pay, rather than doing any further spending.
2. If you’re able to clear a given balance by the end of the card’s 0% on purchases promotional period, then use your card like an unsecured loan to make purchases during this period, but without having to pay any interest on the money borrowed.
3. If you’re disciplined and sensible with your money then you can use the incentives these cards offer to enjoy discounts on the items you purchase everyday (discounts on groceries for instance).
4. Make sure you know exactly how your credit card provider is defining a ‘purchase’. Normal spending and card activity will fall under the 0% offer, but cash advances (ATM activity), online gambling, and buying gift vouchers won’t be considered a ‘purchase’.
5. The 0% on purchases period is set in place by the credit card company to encourage you to spend and make money for them. Prove them wrong by only making purchases that are essential.
6. Don’t use a 0% purchase card for balance transfers even if it has a 0% balance transfer offer. Payments made against credit card debts are tiered in such a way that you’ll pay off the cheapest or ‘free’ debt first, which in this case is likely to be the balance that you’ve transferred. If you don’t clear that balance during the 0% on purchases period, then the expensive debt left over will be hit with interest levels of around 17%. Essentially, you’re going to lose a lot of money through what’s known as ‘negative payment hierarchy’.
7. A good way to avoid confusion or losing money through interest payments is to use your credit card for one purpose only, grocery shopping for example.
8. Always ensure that you pay the minimum balance at least each month. If you don’t, then you risk losing the benefits of the promotional period and, even worse, adversely affecting your credit rating.
9. If you’re using your card for online payments only, then maybe a prepay credit card would be more appropriate?
10.  Carefully evaluate promotional periods, interest rates and introductory deals before choosing your card. Shop around, and don’t just settle for cards that are issued by your existing bank.

You may be aware of the cost of living, but have you stopped to consider the cost of leaving? Taking credit and debit cards on holiday is a convenient and safe way to spend overseas, but if you get it wrong, then the surcharges and hidden fees associated with these cards can mount up.

Some of these fees are made explicit when you apply for the card, some are more ingrained. The key issue is that most of these charges can be avoided if you use your cards strategically, or switch to cards that are free of hidden catches.

Loading Fees

Exchange rate loading fees are an extra add on when you make transactions overseas. Your credit card exchange rate is dictated by the supplier’s wholesale rate and is usually very favourable. Once you take into account the loading fee though, typically in the region of 2.75%, you’re exchange rate becomes uncompetitive.

These loading fees are unlikely to feature on your statement either, this is why you must go through the terms and conditions of a credit card with a fine toothed comb before you apply.

Avoid loading fees by applying for cards that don’t apply them. A number of leading lenders offer cards that don’t carry loading fees.

Cash Withdrawals

You will be charged an exorbitant amount of interest on cash withdrawals overseas, and these interest payments will apply immediately. Unless you love paying a lot more interest on your borrowing that you should, try to avoid overseas cash withdrawals.

Typically, you will be charged 2% of any cash withdrawal made with a purchase credit card, or a minimum fee of £2. Cash withdrawals are also the last to be cleared from your balance, so that higher rate of interest will hang around for longer and cost you more if you don’t immediately clear the balance.

Spending Fees

These fees apply exclusively to debit cards, and are a flat rate fee that some banks put on foreign transactions. Spending fees amount, on average, to an added cost of £1.75 on each transaction. Not all banks charge these fees though, so choose carefully if you have a number of overseas trips in the pipeline.

Maybe I should leave the cards at home?

That’s not a great idea. Having credit cards abroad could be vital in an emergency, plus carrying huge amounts of cash around with you on unfamiliar territory is not recommended.

Be sure to inform your bank before you go away. If not then when you use credit card abroad, they may consider your use as unusual activity and they could potentially block it, which would prevent you from accessing your funds while you’re on holiday.

What else should I know?

Make the most of favourable exchange rates by ensuring that you pay in the local currency when using your card. This can be confirmed at the point of sale, just before you enter your pin. Also, a number of overseas banks will charge you for using their cash points. Do check, in case this is avoidable.

When transferring your balance from one card to another, there are certain pitfalls to avoid and benefits to take advantage of. Manoeuvre around the dangers and through the gains to make the most of your balance transfer card. Here are ten pointers to a successful balance transfer.

1. Find a card that offers a 0% balance transfer for the longest possible period, thus prolonging the period that you can enjoy interest free repayments.
2. Transfer your balance to a card with a low balance transfer fee. Some cards charge you up to 3% of your existing balance to transfer, which represents a large amount if you’re transferring a big balance. You can transfer your balance for a fee of around 1.7% if you shop around.
3. Your repayments are tiered so that the cheapest part of your debt is paid off first, and those purchases carrying the highest rates of interest will be paid off last. Bare this in mind before you apply for a card, and know how your repayments will be structured before embarking on this journey.
4. Be real. If you won’t be able to pay off your balance during the interest free period then perhaps a lifetime balance card would be more appropriate.
5. Consider combining the credit card balance transfer with a 0% on purchases offer. If you’re disciplined and sensible with your money, you can use a 0% on purchases card to get discounts on the things you routinely buy. However, reckless spending on these cards can lead to you inadvertently tying yourself to higher interest rates on some purchases and instant cash transactions.
6. Many 0% balance transfer credit cards carry a minimum monthly spending limit. Try to restrict yourself to a card with the lowest minimum monthly spend.
7. Instant cash transactions carry a higher rate of interest than purchases and will be the last thing to be paid off. Making a withdrawal is regarded as an instant cash transaction, but some banks also consider online gambling and even buying gift vouchers to come under this category. Check out their stance before applying.
8. Check also the APR rate after your initial 0% interest phase has concluded. Some cards offer a high APR rate after the initial promotional period to counterbalance their losses.
9. Make yourself some money by paying the repayments that you’re avoiding with a 0% balance transfer credit card into a savings account.
10. 0% balance transfer cards only work if you clear the balance during the initial promotional period. The more you spend on these cards, the greater the risk that you will be subjected to high rates of interest in the future.

Air miles Credit Cards - What are they? (and how can I fly around the world for free!!!)

Airmiles credit cards allow you to accrue Airmiles as you spend. These Airmiles (or points) may be redeemed against flights, car hire or hotels.

For regular travellers, the Airmiles credit card represents a useful device for saving money on flights. But how much must you spend to jet off to the hottest destinations on the globe? Here are our top ten most desirable destinations and the average spend that could take you there.

The Airmiles Top Ten

1. Paris – Art, architecture, music, cheese; Paris has it all. By spending £3000 on your Airmiles card, a short flight and introduction to café society could be yours.
2. Rio De Janeiro – Shop around, and a spend of as little as £25,000 on your card will ensure that you’re whisked away to the land of the Samba and Batucada.
3. Cairo – Egyptology may be racked with curses, but a trip to Cairo certainly won’t put a curse on your Airmiles Card. A £25,000 spend can take you there.
4. Tokyo – There’s no guarantee of bumping into a forlorn Scarlett Johansson in one of the cities many high rise hotels, but a £30,000 spend on your Airmiles card will facilitate a flight to Tokyo.
5. Mumbai – Visit India’s principle port on the Suez Canal in return for a total spend in the region of £30,000.
6. Madrid – The orange and olive groves, Museo Taurino, Santiago Bernabeu and flamenco nightlife of the Spanish capital are a wonder to behold. A £3000 spend on your Airmiles credit card takes you there.
7. New York – Sample the sights and sounds of Woody Allen’s favourite town by spending an average of £32,000 on your Airmiles credit card. You’ve seen the film ‘Manhattan’, now experience Madison Avenue and Central Park for yourself in their full, colourful splendour.
8. Cape Town – In return for a £33,000 spend on your card, the delights of Table Mountain, the Cape Peninsula National Park and the Peninsula bay can be yours.
9. Beijing - The development of Beijing continues to proceed at a rapid pace, and you can involve yourself in this booming economy for a £35,000 spend on your air miles credit card.
10. Sydney – Sports, beer, sports, beer and opera. What more could you ask for? A spend of £60,000 takes you halfway around the world to the land of Home and Away.

What else should I know about Airmiles Credit Cards?

• Airmiles are not an exact quantity. An airmile on one credit card will not necessarily equate to an air mile on another. It’s important to ascertain exactly how many points you need for a free flight before deciding on an Airmiles card.
• You often need to spend a significant amount on your credit card before you are entitled to a free flight. Ensure you spend enough on your credit card annually to reap the benefits. If you’re a low spender then another reward credit card may be better for you.

Always clear the balance

Because the magnitude of rewards is so high with Airmiles cards, many have higher than average interest rates.

It’s imperative that you pay your balance off in full at the end of every month or you’ll have soon paid far more in interest than your free flight is worth.

If you feel that air miles would be of no really use to you, maybe you should consider one of the multitude of cash back credit cards that are on offer these days