BE A CARD PLAYER

PAYING for your holiday on plastic may seem a good idea... but not if you get hit by steep interest charges.

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Unless you pay off more than the minimum each month, you could end up paying more than twice as much for your money - and the debt will take years to clear.

Put pounds 1,989 on a card with an APR of 18.5 per cent, repay just the minimum 2.5 per cent every month and it will take you 22 years and 10 months to clear the balance. And the interest would be an eye-watering pounds 2,490.

But repay just pounds 20 per month extra and you'll clear the debt in under six years and pay only pounds 857 in interest, according to Moneysupermarket.com Spokesman Peter Harrison said: "These calculations send a clear message - simply by paying off a bit more every month the length of time it takes to clear the balance can be dramatically reduced."

If you think you will have trouble making repayments, consider moving your debts to a 0 per cent balance transfer card. That will mean you won't have to pay any interest on what you borrowed for a set period.

Financial analysts Defaqto say 160 cards now have a 0 per cent introductory rate. As our table above shows, Virgin Money's Mastercard has 0 per cent on balance transfers for 14 months, and Santander, Halifax and MBNA offer the same deal for 13 months. The Egg deal runs even longer, until August next year.

But if you move your debts to one of these deals, don't be tempted to use the card to splash out. They can charge high rates for purchases... so buying something for just pounds 50 on a card with an existing balance transfer of pounds 2,500 could cost you up to pounds 106 in interest over 12 months.

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This is due to current repayment rules, which mean the balance with the lowest interest rate is paid off first, while other debts continue to be charged interest at a much higher rate.

Fortunately, these rules are due to be scrapped at the end of January next year, so repayments will have to go towards paying off the most expensive debts first.

David Black of Defaqto said: "Consumers will currently be better off if they just use their credit card for one purpose - just for a balance transfer, or just for purchases."

One of the best cards to use for purchases is the Sainsbury's Mastercard which charges 0 per cent for 12 months and after that has an APR of 15.9 per cent. To qualify, you must hold a Sainsbury Nectar card.

Kevin Mountford of Moneysupermarket. com said: "Another idea is to go for a card such as the Nationwide one where the most expensive debt is already paid off first."

Case study

'I'm switching to save for a house'

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LYNETTE Jackson is transferring her pounds 1,500 credit card debts to a 0 per cent balance transfer card so she can pay them off and start saving for a house deposit.

Lynette, 34, a rehabilitation manager, said: "I've got a couple of cards, one with M&S Money and one with Lloyds TSB, and the combined balances are about pounds 1,500.

"The interest I am paying is high - more than 20 per cent on the M&S card - so the balance never seems to shrink much, which is why I am switching."

Lynette, from Bath, is transferring
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