Time to deal yourself a new hand of cards

While the official cost of borrowing is on the rise -four interest rate increases in six months, and more expected - many credit card rates have been steady for some time and some have actually fallen.

Providers that have chopped interest rates lately include Tesco Personal Finance, which has cut its introductory APR (annual percentage rate) twice in the last five months. Even Barclaycard, the UK's most popular card but also one of the most expensive, was this month forced to cut its rate for balance transfers in a bid to stay competitive.

Switching to a cheap credit card deal could be one of the best ways of spring-cleaning your finances if you racked up some Christmas and New Year spending debts.

There are some very good offers for people ready to transfer outstanding credit card balances to another provider offering a better rate. But scan the small print carefully as the terms can vary considerably from provider to provider.

Internet bank Egg boasts the lowest introductory APR on debt transfers - 4.5 - followed by Tesco, RBS Advanta and the Co-operative Bank, which all charge 4.9.

Before making your move, it is important to decide how quickly you want to pay off the card debt. With most of the cards on the market there is a time limit on how long the special offer debt transfer rate is available for. For example, Egg's lasts for only six months, and with some cards it is even less.

If you don't want to be tied in to paying off the debt within a certain period, go for a card where the balance transfer rate is valid until the debt is cleared. These include Barclaycard, Alliance & Leicester Diamond, Capital One Bank Premier and Lloyds TSB Asset Advance.

Financial data magazine Moneyfacts looked at how much interest would be charged in the case of someone transferring £1,000 to a new card, and repaying it over 12 months from March 1 this year.

Barclaycard came out best at £58.32, because its low special offer balance transfer rate is available for the whole 12-month period. Tesco, RBS Advanta and Egg came second, third and fourth (£64.12, £68.46 and £69.84 respectively). However, if the person repaid their debt within six months, the Egg card would be cheapest.

If you are going to use the card to buy goods, you will probably want to go for one with a low rate for purchases. Barclaycard scores badly here: it is one of the very few providers that has recently raised its interest rate for purchases - by 0.7%

It has been accused of trying to hide this by changing the way it quotes its APR. Its basic headline APR was 19.9 before but is now quoted at 19.4. It seems lower. But it isn't.

This is because the company is now excluding the £10 annual fee from the APR whereas before it was included. Barclaycard argues this is perfectly fair because all new customers recruited this year are exempt from the annual fee for 12 months, as are existing cardholders who spend more than £2,000 a year.

Growing numbers of people are card-hopping, often only staying with a card until its introductory rate runs out, and then flitting to the next cheap offer. Such people have been dubbed rate surfers, and there is a lot to be said for this approach - if you can be bothered with all the chopping and changing.

With an introductory APR for both purchases and balance transfers of 4.9 until January 1 2001, it's no wonder that the Tesco Visa card is proving phenomenally popular among the surfers. Last month alone 250,000 applications were received for the card. The company has reduced the introductory APR three times since May last year, when it was 9.9 for six months. The new offer rate is pretty good - but come next January, the APR will rise sharply to 14.9.

If you're not keen to see the rate you pay jump in this way, it might be worth focusing on the standard rate rather than the short-term "teaser" rate.

Cards with competitive standard APRs, where what you pay won't leap alarmingly, include Egg (one standard APR for purchases of 9.9), Northern Rock (introductory APR for purchases of 8.8 for the first 12 months, then 11.9), and Hamilton Direct Bank (introductory APR for purchases of 5.9 for the first six months, then 11.9).