There have been two significant changes in the credit card market in the UK. The first is the sounding of the death knell on zero percent deals. The second is the government initiative to end or significantly lower credit card charges on retailers.

In the recent past, credit card companies habitually offered new customers zero percent introductory interest deals. Clients could consolidate debts from other areas - other credit cards, overdrafts, personal loans - and transfer them onto a credit card with no interest to pay for anything up to a year. A customer with good financial discipline could move from deal to deal and clear the debt sooner than if they were paying standard interest rates. Alternatively, they could make purchases with other cards and then transfer the amount to the zero percent card.

The credit card companies benefited by making an up-front charge for the transfer or because most customers did not have this kind of discipline and would make purchases with their new card. Those purchases attracted higher interest rates and sometimes further charges. Companies helped matters along by supplying customers with credit card cheques that attracted higher charges on transfer although they also offered lower interest rates than normal. The interest rates were advertised where the charges were not.

Higher interest rates and the greater burden of credit in the UK have led to an increased number of defaulters. Like other lenders, companies are feeling the pinch. As a result, it seems that fewer will be offering zero percent in future. Instead they will offer long term lower interest rates. Again, they will be gambling that consumers lack the financial discipline to control their spending and additional interest or charges will accrue. Zero interest rates deals will be rarer and debt management using cards more tricky.

The other thing that will caused credit card companies to tighten up is government pressure on companies to lower or eliminate charges to retailers. Retailers are charged one to two percent per credit card transaction and in most cases are not allowed to pass these charges onto customers. The UK government is now requesting that companies considerably lower or eliminate charges. While this is at the request stage, it would not be surprising if they threatened to or actually brought legislation forward to do this.

This means that credit card companies are likely to switch to charging customers more or raising interest rates again. Undoubtedly there will be attempts to making the charging regime appear attractive by marketing additional services with the cards - identity theft insurance, air miles, travel insurance and so on. But most of these 'services' will rarely be used.

What can you as the consumer do to combat these changes. The first thing to do is look now for cards that are guaranteeing longer term lower interest payments and for companies that don't charge. Second, if you do want a card offering additional services and are prepared to pay a charge for them, make sure they are services you will use repeatedly so that you get your money's worth. As with any card make sure you know what the credit card limit will be, what happens if you go over the limit and what happens if you miss a payment. In all of these areas, some companies and deals come out better than others.

Look for the Honesty Box to get a clear picture of what credit card deals are really offering and how you can benefit from them.

About the author:

Writing for Creditmarket.co.uk providing helpful information to consumers.