Credit card balance transfer fees are on the increase.

The average charge has risen by 0.5 per cent to 2.67 per cent in the past year, according to MoneyExpert.com.

Last September, the typical fee was 2.1 per cent, but the desire to recoup profits lost following the Office of Fair Trading’s order to cap penalty fees at £12 has prompted a slew of rises.

And around 90 cards now charge a flat transfer fee of 3 per cent.

That means someone shifting a £5,000 debt could pay £150 for the privilege.

You don’t have to fork out to move your debt to a cheaper card though.

True, you won’t find any lenders who don’t charge a fee offering 12 months interest-free on a transferred balance.

But you will find five and six-month deals – providers include Norwich and Peterborough Building Society, Northern Bank and Ulster Bank.

If you don’t think you can clear your balance that quickly, several others – including Sainsbury’s Bank, Northern Rock, Yorkshire Building Society and Mothercare – charge less than 6 per cent for the life of the transferred balance.

If you really put your mind to clearing your debt, you could find that works out cheaper than paying a transfer fee.

Abbey has launched a credit card offering a very attractive 5 per cent cashback on £1,000 of supermarket shopping.

That’s a potential windfall of £50.

But before you rush off to fill out your application, there’s something else you need to know.

After an initial three months interest-free for purchases, those who don’t clear their spending every month will be charged a less than attractive rate of 15.9 per cent.

As a result, heavy users could soon find interest charges more than outweigh the cashback benefits.

Barclaycard, IF and Halifax all have cards which charge less than 10 per cent interest, and for someone who keeps a running balance, they could be better value.

But the interest rate isn’t the only cost you need to keep an eye on when choosing plastic.

Last year the Office of Fair Trading ruled credit card companies must keep penalty fees to a maximum of £12.

And while this might seem like a step in the right direction, consumer organisation Which? says they have simply found other ways to recoup the lost income.

So when you’re choosing a new card, it’s essential to check all the small print.

Which? advises paying close attention to…

• Annual fees and low usage charges
• Balance transfer fees
• Minimum payments designed to maximise your interest bill
• Payments allocated to the cheapest debt first
• The way interest is calculated
• Credit card cheque interest rates and fees
• Cash withdrawal rates and fees

Financial institutions are finding ever more ways to part us from our cash.

Price comparison site Moneysupermarket.com warns: “Brits face running a gauntlet of 112 charges across just five financial products – mortgage, current account, savings product, loan and credit card.”

The site’s managing director Stuart Glendinning adds: “It is unbelievable that five financial products can be the root of so much penalty pain.

“With so many default fees and charges in place, even the most astute consumer can fall foul.”

Mortgages are the worst offenders with a possible 51 different penalty charges, while current accounts have up to 27, credit cards have 19, loans 11 and savings accounts four.

That’s why it’s essential – particularly with mortgages where there are so many ways to get caught out – that you read every word of the small print before you sign on the dotted line.

In the world of personal finance, it isn’t always immediately obvious when something is a good deal.

But spending a little time with a calculator generally sorts things out.

A correspondent writes: “I am considering transferring a balance of (several credit cards) £721 plus adding £482 (for carpets) to an Abbey 0% interest card deal. It lasts till March 2008.

“The snag is that they are charging £37.50 for the total amount. I did tot up my interest on the cards and it comes to £96 over 9 months.

“The alternative is just to use my savings from my Isa. What do you think?”

The key thing is to compare the £37.50 balance transfer cost with the amount of Isa (individual savings account) interest that would be lost if it was used to pay off the debt now.

If this is more than £37.50, it’s worth making the transfer and clearing the debt with Isa cash after nine months. If the lost interest is less than £37.50, it’s better to clear the debt now.

Say the Isa interest rate is 6 per cent. That will be worth £54.14 on £1,203 (the total debt) over nine months, so it would be best to leave the Isa cash alone until the end of the interest-free period.

Investing a bit of time working these things out not only makes you feel more on top of your finances – it saves you money too.

Imagine my surprise after shredding a sheet of unsolicited credit card cheques last week when another batch turned up in the post.

(See ‘Don’t credit these card cheques’ below)

It seems that my card issuer, MBNA, just won’t take ‘no, thank you’ for an answer.

What do I have to do for it to get the message that its cheques are unwanted?

Send back the pieces from the shredder?

Annual fees on credit cards will be the norm by the end of the decade, says Defaqto.

Last year’s decision by the Office of Fair Trading to limit credit card providers’ penalty fees to £12 has prompted many to raise their interest rates – and look for other ways to recoup the lost profits.

The financial research company says Barclaycard is considering introducing an annual fee of up to £20 for customers who don’t use their card regularly, and it reckons many others will follow suit.

As a result, it predicts more people will turn to debit cards instead.

Sadly, the users who ditch their credit cards will be the ones for whom they don’t cause a problem.

If only those who waste millions of pounds a year in interest on card debts would give up as well and turn to debit cards.

At least then, limited by the bounds of their overdrafts, they couldn’t spend so much money they don’t have.

In the meantime, it might be worth switching to a card that charges a lower rate of interest.

Yet more junk mail - this time a sheet of credit card cheques ready printed with my name from MBNA.

The credit card companies want us to believe they’re a pain-free way to have all the things we want but can’t afford.

In fact, many providers charge the same astronomical interest rates for cheques that they apply to cash withdrawals (often between 20 and 30 per cent) - and allow no interest-free period, so their profits start clocking up right away.

Mine always end up in the same place: the shredder.

It’s all they’re fit for.

Halifax is launching what it describes as a ‘new look’ One credit card.

It charges no interest on balance transfers and purchases for nine months, and has a typical long-term interest rate of 13.9 per cent.

Look good to you?

Its attraction may fade a bit when I tell you that the old Halifax One card, which it replaces, also offered nine months interest free on transfers and purchases, but had a typical standard rate of just 9.9 per cent.

Halifax has added the sweetener of a further six months interest free for new transfers made ‘from the start of the calendar month following the first year anniversary of the card’.

And who exactly is going to take advantage of this part of the offer?

Borrowers who think it’s worth leaving a balance clocking up interest elsewhere until they can transfer it to their Halifax One card on its first anniversary, when they could move it now and stop paying interest altogether?

Or those who think it’s a good idea to spend the year making purchases on another interest-charging card, just so they can transfer them later, when they could make them interest free with Halifax?

I sincerely hope not.

The only circumstance in which it would be worth taking up phase two of the Halifax One offer is if you have a second zero per cent card with a balance that needs transferred off in a year’s time to avoid the start of interest charges.

So there you have it: a new look card that looks pretty much like the old one - apart from the addition of an offer that will benefit few people, and a long-term interest rate 40 per cent higher than the old one.

Ken Stannard, Halifax’s head of credit cards, says excitedly: ‘This is yet another high-street banking first from the Halifax.’

Yes, indeed.

If you really need another credit card, you can do better. If you don’t believe me, you can seach the latest credit card best buys here