All That You Wanted To Know About 0redit Cards
Making 0% balance transfer credit cards work for you
If you're carrying around a large credit card debt, shouldering the burden of all that interest, it's probably time to switch to a zero per cent credit card that could save you hundreds of pounds in unpaid interest.
How do they work?
Zero per cent credit cards offer you a break from your interest payments, allowing you to transfer an existing balance and make a real dent in your debt. You'll have to pay a fee to move your money - typically of between two and three per cent of the total balance - but by choosing the right card, you'll still be able to save loads.
Find the longest offer
The length of the promotions on zero per cent balance transfer cards vary, usually from between nine and 15 months, and you should look for a card with the longest possible offer. Rather than just taking the card that's offered by your bank, use a comparison site to find the longest interest free period for the lowest transfer fee.
How much will it cost me to transfer my balance?
When they were first launched, interest free balance transfers didn't charge customers for moving their money, but as increasing numbers of people took to being 'rate tarts', moving their debt from card to card without ever paying it off or paying any interest, banks began charging balance transfer fees.
But even if you have to pay a three per cent fee on a balance of 2,000 - which would work out at 60 - you would still save much more than that by taking a year off from the average APR of 17.31 per cent (CreditAction.org).
Make it work for you
Interest free balance transfers are great, but you need to make sure that you don't get caught out, ending up in even more debt than you started with.
Your interest payment holiday is a great way to clear your credit card debt once and for all. However, many people end up using it as an excuse to build up new debt on their cards.
But balance transfer credit cards shouldn't be used for spending. If you still want to shop on a credit card you should use a different card, preferably one that offers interest free purchases or cash back.
Tiered payments
Credit card companies allocate your repayments to different "segments" of your debt. This means that any repayments you make will go against the "cheapest" debt - your interest free balance transfer - and any spending you've done since transferring the balance will continue to accrue interest at the standard APR until you've paid off all the "cheaper" debt.
Other traps
You also need to look out for things like minimum monthly spending, higher interest on instant cash transactions and make sure that you clear your debt before the promotional period ends or you'll find yourself back where you started.
If you're carrying around a large credit card debt, shouldering the burden of all that interest, it's probably time to switch to a zero per cent credit card that could save you hundreds of pounds in unpaid interest.
How do they work?
Zero per cent credit cards offer you a break from your interest payments, allowing you to transfer an existing balance and make a real dent in your debt. You'll have to pay a fee to move your money - typically of between two and three per cent of the total balance - but by choosing the right card, you'll still be able to save loads.
Find the longest offer
The length of the promotions on zero per cent balance transfer cards vary, usually from between nine and 15 months, and you should look for a card with the longest possible offer. Rather than just taking the card that's offered by your bank, use a comparison site to find the longest interest free period for the lowest transfer fee.
How much will it cost me to transfer my balance?
When they were first launched, interest free balance transfers didn't charge customers for moving their money, but as increasing numbers of people took to being 'rate tarts', moving their debt from card to card without ever paying it off or paying any interest, banks began charging balance transfer fees.
But even if you have to pay a three per cent fee on a balance of 2,000 - which would work out at 60 - you would still save much more than that by taking a year off from the average APR of 17.31 per cent (CreditAction.org).
Make it work for you
Interest free balance transfers are great, but you need to make sure that you don't get caught out, ending up in even more debt than you started with.
Your interest payment holiday is a great way to clear your credit card debt once and for all. However, many people end up using it as an excuse to build up new debt on their cards.
But balance transfer credit cards shouldn't be used for spending. If you still want to shop on a credit card you should use a different card, preferably one that offers interest free purchases or cash back.
Tiered payments
Credit card companies allocate your repayments to different "segments" of your debt. This means that any repayments you make will go against the "cheapest" debt - your interest free balance transfer - and any spending you've done since transferring the balance will continue to accrue interest at the standard APR until you've paid off all the "cheaper" debt.
Other traps
You also need to look out for things like minimum monthly spending, higher interest on instant cash transactions and make sure that you clear your debt before the promotional period ends or you'll find yourself back where you started.
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