Are you a little guilty of mounting debt on your credit card? Perhaps you pay off the minimum balance every month or – even better than that – half or three quarters of your bill? But no matter how hard you try, there is always a pesky few euros that seem to permanently sit on that handy piece of plastic.

Not only does that potentially give you a financial headache, this is well-earned cash that goes straight into your bank’s account – rather than your bank account.

If you’re determined to get rid of that amount once and for all, then changing credit cards may be a good option for you. It’s not just a new shiny piece of plastic – many banks are now offering 0% introductory rate on their APR.

What is APR?

APR is the amount of interest you pay annually: basically how much your credit card is costing you. While this interest applies to the items on your credit card that haven’t been paid off at the end of the month, it also takes into account stamp duty and other regular charges.

So a 0% APR can give you a few months to tackle reducing the amount of debt on your credit card, rather than just chipping away at the interest that is paid to the bank.

Bank of Ireland for example, is now offering 0% APR on their credit cards for the first seven months. This is a change to their previous set-up, where you were paying rates of 3.9% for the first six months with their classic credit card, or for 12 months with their Platinum Advantage credit card.

Then there is Chill which also offers 0% for nine months – the longest introductory rate – as well as KBC which offers the rate for six months.

switcher

If you are someone who is comfortable in switching cards regularly, these are definitely the rates to concentrate on. However, if you tend to be a little lazy and don’t plan to switch again for another few years, then you need to look at the bigger picture and consider the rates you will pay after that period is over.

AIB is competitive in the credit card market, but be careful what card you opt for. While their CLICK visa credit card has the lowest rate in the market, their MasterCard and VisaCard are among the highest.

At 13.8% the CLICK visa credit card is a good option, but be aware that you are limited to a maximum credit limit of €1,500.

If you are someone who doesn’t put a lot of money on your credit card, though – perhaps just flights or concert tickets – then this could work for you. Other banks, such as Ulster Bank and Chill Money, have the same limit, and their rates are much steeper – at 22.7% and 22.9%, respectively.

hey, big spender

Let’s step it up, though. Perhaps you use your card for bigger holidays and business expenses. If that’s the case, then Bank of Ireland’s Platinum Advantage – with an APR rate of 19.6% – is a good bet for you.

As mentioned, they now have an introductory rate of 0% for seven months, so by switching you’ll get a bit of breathing space to try and clear off any niggling debt you have on your current card.

the bottom line

While it is good to consider all these percentage rates, what does it actually mean in straight-talking euros in terms of paying off your bills?

Let’s take Tom Malley, for example. Tom has €2,000 on his credit card. Each month, he can afford to pay off €300, which leaves €1,700 on his bill. This keeps adding up, because of those pesky APRs. He currently has an AIB card with an APR of 22.9% and if he was to stop using his card for a few months, he would have it paid off in eight months.

By switching to Bank of Ireland’s Platinum card, he will cut those repayments down to seven months. If, for example, he had decided to make the change last January, he would have had that extra money in his own account in August, when he heads off on his holidays.

Paying Your Bill

If, like Tom, you’re not the best at paying off your bill, it’s not just the APR you need to watch out for. Also consider the late-payment fees.

While AIB and KBC will charge you €7 for late payments, newcomers Chill and Avant charge double that, at €15.24.

All these fees can be avoided, however, if you keep on top of your payments. Try and pay off your monthly bill in full, but if this isn’t possible, make sure you pay off the minimum fee. This might only be €10 or €15, but it will ensure that your credit card debt does not affect your credit rating.

Remember, though, that the APR will start clocking up on your remaining amount, and you will start to pay a lot in interest. Furthermore, you will seriously prolong the financial problem. CL

APR explainer

APR is the amount of interest you pay annually: basically how much your credit card is costing you. While this interest applies to the items on your credit card that haven’t been paid off at the end of the month, it also takes into account stamp duty and other regular charges.

On the rise

AIB’s rates have risen marginally in recent years, by 0.2%, but these increases aren’t as steep as some of their competitors. Permanent TSB, for example, has raised their APR rate by 2.4% since 2014.