Thousands being rejected for credit cards

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It's getting harder to take out a credit card as the global credit crunch makes companies more wary who they'll lend to. And if you do have a card, the cost of using it is rising fast, latest figures show.

A survey carried out by Moneyfacts.co.uk reveals in the last two months credit cards have been hit hard by rising charges, in particular cash withdrawal fees and rates.

The news comes on the back of figures showing the number of people being turned down for credit cards soaring, with moneyexpert.com reporting that 3.27 million people had credit card applications rejected in the six months to the end of September, 17% more than during the previous six months.

Esther James, credit card analyst at Moneyfacts.co.uk, the financial comparison site, says: "It seems as if the credit crunch is beginning to cause credit card chaos. 125 fee and rate increases inside two months is quite staggering."

With Christmas coming up, incomes will be stretched to the max with more people turning to their plastic for access to additional cash, only to get stung by still higher rates and fees.

- Improve your chances of applying succesfully for credit cards and other financial products

Tips on avoiding mistakes

Choosing the wrong card can be a costly mistake. With almost 300 credit cards to choose from, there is plenty of choice.

Avoid taking cash from your credit card unless you absolutely have no choice. Interest rates average 23%, and are charged from the date of withdrawal.

Also, expect to pay a fee of up to 3%. Would you still withdraw "500 if you knew that by making only the minimum repayments (2.5%, min £5) you would repay a total of "1382.70? That's "882.70 extra in interest over a term of 20 years and 4 months.

Don't just keep to the minimum repayments, take control of your debt and repay as much as you can afford each month.

Doing so will knock years off your debt and save you a fortune in interest.