Credit Card Advice
Credit card balance transfers allow you to save money. But there are pitfalls. So beware!
You have been using your credit card and are now carrying an outstanding balance. Say it is £1,000.00. You cannot afford to pay off the outstanding balance. Your debt is increasing as you are paying interest on interest each month. You want a respite from that. This is where the credit card balance transfer comes in. Credit balance transfers were initiated by credit card issuers as a way of attracting new business. Typically these rates are 0% APR. Who wouldn’t want one of these rates? So you make an application to transfer your outstanding balance on to one of these rates. In the highly competitive UK credit card market many credit card issuers are offering very good credit card deals at 0% APR from between three months to fifteen months. That is you are charged no interest for the duration of the credit card deal. That means your monthly payments attract no interest and as you can pay off as much as you like you should begin to see your outstanding balance reduce.
The flip side is that once the credit card deal is over your 0% APR will revert to the prevailing APR rate of anything up to 18%. So ensure that if you have not paid off the outstanding balance you are in a position to move any remaining balance on to another credit card with a 0% APR credit card deal or at least a lower preferential rate. You should diarise the date the 0% APR credit card deal expires and begin searching for another rate. Remember too that the 0% APR credit card deals do attract a credit card balance transfer of between 2% to 3%. Also, always read the Terms and Conditions as you could lose the preferential rate credit card deal if you are ever late with a payment during the term of the deal. To avoid such a situation set up a direct debit to pay at least the minimum amount each month. You can always pay more than the minimum amount by internet banking, telephone banking, by post or at a bank.
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