Posted by Dotcom Doctor on 11:16 AM

While tinsel and glitter tend to put a sparkle on our optimistic
impressions of the year past, for many bankers around the country, no
amount of decorations will be able to distract them from the depressing
realisation that the country is in dire straits.  The colourful lights and
enchanting ornamentations of the season should not distract the world at
large from recognising the issues or they will end up in a terrifying
situation in the new year if they do not have the best credit cards.

Good credit cards are becoming rarer than ever - why?  Not because banks
aren't able of offering the same excellent service or range of benefits as
previously but because of "bad debt".  The casual reader might assume that
all debt is inherently bad - but the difference between "good debt" and
"bad debt" is that the bad is the kind that is not invested in anything and
is unlikely to be paid back.

As of December 2009, the nation owers over £54 billion in outstanding
credit card balances, and credit card balance transfer amount.  Across the whole third quarter of 2009, bad credit card debt rose from £812m to £1.6 billion.  PriceWaterhouseCoopers research
suggests that, of that amount, £5billion will remain unpaid at the end of
2010.  This is "bad debt" that will ultimately have to be discarded and
counts as a loss for the banks.

What this means to the consumer is an increased amount of "risk
pricing".  This is when credit card companies ascribe an interest rate
dependent on your earnings and overall credit rating.  So if you're really
in need of credit to get through a tough time, you'll have a much higher
level of interest to deal with than a more financially stable equivalent
user.  The other option is a more widely increased APR (annual percentage
rate), which will force consumers to pay larger interest payments in the
hopes of deterring them from extreme lending.

While it was once easy to determine which were the best credit cards
merely by finding which ones had the highest interest rates, buyers will
need to look beyond these indicators to find ones that will most closely
match their needs.   Perhaps the best way to do this is to look at reward
credit cards - with a points scheme that can convert into airmiles, charity
donations or goods, this is the main way you can still get any value from
your credit card.  But even this must be approached carefully - the days of
risk-free access to back-up collateral are officially over.