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Use credit card like savings account, expert says

Mon, 27 Feb 2006

Consumers are being urged to approach credit cards in the same way they manage their savings accounts.

Andy Smith, the manager of personal finance products at price comparison website uSwitch, says a single credit card may not suit all the needs of an individual banking customer.

He says people should get a credit card to suit every need, for example one credit card for purchases, another for balance transfers and a third for everyday expenses.

"With savings accounts you have one for everyday spending and another for earning interest," according to Mr Smith.

"You can do the same with your credit cards," he comments.

If people have multiple needs, they should consider signing up for a range of credit cards, Mr Smith concludes.

Meanwhile, research by uSwitch revealed that credit card holders who overpay their credit card bills by £1 a week could cut years off their repayment period and make considerable savings.

The website's head of personal finance, Nick White, comments: "In a climate of high interest rates and falling minimum repayments, for some people there is now the possibility that they could finish paying off their mortgage before they pay off their credit cards."

He advised people to consider the "true cost" of their borrowing before committing to credit.

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