The changes were revealed by Moneyfacts which showed that there had been large rises in fees charged for withdrawing money from cash machines as well as rises in cash interest rates. It has also been revealed that Banks and Building Societies have also increased the commission charged for foreign use as well as increasing balance transfer fees.

Alliance & Leicester implemented the largest cash fee rise, upping its rate from 2.25% to 3%. This means that withdrawing £250 with your credit card will now cost £7.50. Other banks have also upped their charges with the AA, Bank of Scotland, Halifax and Intelligent Finance all putting up their rates from 2.5% to 3%. Nationwide, Smile, and Yorkshire Building Society also increased fees from 2% to 2.5%.

Smile has increased its cash rate by the greatest amount, pushing up the interest rate for cash withdrawals on its Gold Visa from 14.9% to 23.9%. The problem with withdrawing cash using your credit card is that it is very expensive, first of all you incur a fee and then there is no interest free period. So it is best to avoid taking money out using your credit card at all costs. Comparisons with overdrafts and personal loans, show that borrowing money in this way has always been extremely expensive.

Balance transfer fees have also gone up with Alliance and Leicester increasing its balance transfer fee from 2.25% to 3%.

These new fee and rate rises plus the credit crunch are behind a massive customer move away from credit cards towards debt consolidation loans. Many borrowers are finding it necessary to tighten their financial belts, and this includes clearing old card balances and cutting up cards.

Many credit card companies offer very low interest rates on balance transfers; sometime this can be as low as zero percent. But there is a time limit on this balance transfer. So for example if you need six months to pay off your debt and the zero percent interest on balance transfers apply for the first six months then this is an option worth considering. This could possible save you from having to pay back possibly hundreds in interest fees.

Make sure you read the fine print on the deal before signing and take care to make all repayments on time. Missing a payment or paying late can result in the lender replacing your great rate with a much higher APR, leaving your paying more than if you had taken out a debt consolidation loan to clear the original debt.

Another danger is if you do fail to pay back the balance within the given time period the zero percent will revert back to the a much higher rate on the card and sometimes this includes the lender back-charging interest on the first six months of the loan as well. This could result in repayments outweighing the benefit of the zero interest on the first six months.

Lenders do have a responsibility to warn you if the introductory offer of zero percent is about to run out. However as a general rule its better not to trust to this reminder jogging your memory, as it can often be buried in small print. Just make sure you yourself are always aware of the time limit on your offer or one morning you could wake up to a big surprise.

As there are now more and more people defaulting on their loans banks are increasingly feeling the pressure so don’t be surprised to see banks tightening up one their lending criteria as well as pushing rates on personal loan rates higher and higher. For instance the lowest personal loan today is close to 6.9% while just one year ago it was more like 5.9%.

More and more people believe they will never be debt free and over 8 million people who take out loans to consolidate debt will find that they actually owe more after 5 years than they did, according to research from moneysupermarket.com.

The study showed that 12.7 million Britons had taken out loans to consolidate some or all of their existing debt. However 8.4 million of those people continue to build up more and more debt.

A third of people who have taken out debt consolidation loans now feel that they are trapped by debt and that their debt is actually spiralling out of control. Only 13% of people who have to loans feel that it was a positive decision.

If you are thinking of taking out a personal loan make sure you shop around to find the right deal for you.

Many customers choose a zero percent interest rate credit card to help manage their finances, however many credit card companies are charging customers transfer fees of up to three percent of the balance.  If someone with a £5,000 debt is charged 3% they will then have to pay a fee of £150.  The Office of Fair Trading is considering looking into these fees.

Many consumers who want to save money on their interest payments and manage their debts have used a zero percent balance transfer deal.  Almost all credit card providers who offer zero percent balance transfers now charge a handling fee anywhere from two percent to three percent of the balance being transferred.  The balance transfer handling fee became widespread after banks and building societies were hit last year by the Office of Fair Trading on charging penalty fees, so the banks then sought another source of income, which has come to be the transfer fees on zero percent balance transfer cards.  According to the report almost 12 million people have switched credit cards over the past year with an average fee of £19.99.

Balance transfer credit cards are ideal for those who have large sums that they want to pay off and avoid paying interest on.  However, as you are searching for a credit card with a zero percent balance transfer you will want to compare the handling fees that the credit card provider will charge as some will only charge a flat rate, while other will charge a percent of the amount being transferred.

Bear in mind too how long you realistically expect to take to pay off the debt.  You may know that the 0% period only offers you a break from paying interest and that you cannot clear the outstanding sum in that time. If so, you will want to calculate how much interest you will be paying once the period is over. It may cost you less money and hassle to arrange a debt consolidation loan. Although a loan will attract interest from day one, at least you are committed to a set period to repay at a rate that won’t change.

Many credit card companies offer very low interest rates on balance transfers; sometime this can be as low as zero percent. But there is a time limit on this balance transfer. So for example if you need six months to pay off your debt and the zero percent interest on balance transfers apply for the first six months then this is an option worth considering. This could possible save you from having to pay back possibly hundreds in interest fees.

The danger is if you do take that option and you fail to pay back the balance within the given time period the zero percent will revert back to the normal rate of the loan and this includes the lender then charging for interest on the first six months of the loan as well. This could result in repayments outweighing the benefit of the zero interest on the first six months. Banks do have a responsibility to warn you if the introductory offer of zero percent is about to run out. However as a general rule its better not to trust banks if you can help it when it comes the things like this. Just make sure you yourself are always aware of the time limit on your offer or one morning you could wake up to a big surprise.

This is forcing them further into debt by turning lower interest debts into high interest unsecured loans. Several credit card companies have promoted credit card schemes, like switching cards, as positive methods of reducing debt. However, the hidden fees sink many card holders.

The balance transfer is the biggest money grabber. Zero balance-transfer fees on 0% balance-transfer deals look good, but the fee is not part of the 0% deal.  All new purchases are subject to interest at the purchase rate.  There is also a fee for not making a purchases within three months. In fact, some companies will discontinue the 0% deal if the card holder does not meet a minimum purchase balance.

Cards also increase the consumer’s credit limit, usually when they are strapped and need extra cash. The objective of this scheme is to force the client to transfer debts to the card, increasing potential profits for the financing company.

Some cardholders have even put their mortgage payments on their cards, or transferred low interest secured loans to high interest credit cards.

Fees attached to cash withdrawals, checks with handling fees that are as much as £50, and a sliding scale of fees, all increase a card’s balance, even if the consumer is not making new purchases.

This type of new scheme is allowing financing companies to turn down record number of new accounts, while still increasing their profits.

• Consider a pay-as-you go mobile.  If you find that you are not using up all the free texts and minutes on your mobile contract, then you are wasting money and should consider a pay-as-you go mobile.  With a contract you can pay as much as £50 a month to your mobile phone company which adds up to £600 a year.  With a pay-as-you go mobile you may pay as little as £30 a month and only pay for the odd call when you need it.  You can save over £100 simply by switching.
• Cut your home phone bills by switching providers.  Although BT may seem like the only company providing the service, there are in fact several cheaper alternatives from cable companies that include a telephone in the package with broadband internet access.  It is worth checking out other services and finding out just how much you can save.
• Save on petrol by using public transportation.  As the price of petrol has gone up it will easily put a hole in your pocket if you are simply using your car to get to and from work when you could just as easily use the bus or train.  Not only is public transportation often quicker, but it can also become cheaper, especially if you end up stalled in traffic for long periods of time with your engine running.
• Consolidate debts: if you are holding a number of different debts – a personal loan, an overdraft, a handful of catalogue accounts and a store card – you will certainly save many by taking out a consolidation loan. A cheap loan can attract an interest rate of as little as 5.7%; compare that to the 30% APR charged by a typical store card and you will see how you can pay off debts quicker and cheaper by putting them all into one place.