Credit card incentives not being gained

A new report has revealed that a failure to pay off all your credit card each month can mean you are not getting the benefits of its advertised incentives. Results from the study by moneysupermarket.com found that 56 per cent of cardholders opted for their card because of the perks and incentives offered, such as cashback, loyalty club points or air miles . However, many who have taken out a rewards card are paying more interest on outstanding balances than the benefits they are getting from the card.

Although reward cards remain popular, especially for people looking for credit, it is only if you pay off the card at the end of the month that you gain the full effect of the incentives offered. The price comparison website also recommended going for a reward credit card with their usual supermarket, as they often offer the best deal.

A way round the problem of rising interest payments on reward cards can be through individual voluntary arrangements (IVAs), especially if you are facing a variety of interest rates on credit cards and other purchases, as they help you get your finances back on track.

IVAs freeze the interest payments by merging your repayments into one monthly reduced-rate outlay at the same time. Although it requires discipline to do this, it can help those with mounting debt to clear it all off over a period of time.