Take advantage of 0% credit card offers
Opting to transfer your credit card balance to a 0% interest card can be an ideal solution for those who are looking to get their finances under control and reduce their overall debt position.<However, successfully changing to this type of arrangement requires a lot of discipline - and by extending these offers to you, the banks are 'banking' that you don't have any!
First of all, it's important to read all of the conditions attached to the 0% card offer. In order to recoup the lost interest revenue, the credit provider might charge higher late payment, over limit or missed payment fees, which could cancel out the benefits you'll receive from the 0% interest rate.
Credit card providers will also often charge a "transfer fee" when moving your debt across to their account, which can be up to 3% of the total debt amount. This means that on a 2,000 credit card debt, the transfer fee would be 60. If you transfer two or more credit card balances across, you will be charged for all of these transfers, so it's easy to see how these charges quickly mount up. Many introductory offers waive or reduce these transfer fees, but be sure to read the fine print.
Also, while these offers generally allow for a 0% interest charge each month, occasionally they require that a monthly "finance charge" be applied to the account. This can be as little as 50p or 1.00, but again, it's important to read the fine print and understand all of the conditions and rules attached to your new account.
Tips for success:
Read and comprehend all of the conditions that come with the balance transfer offer, so you know exactly what you're getting into.
Enquire and ask lost of questions. How long does the 0% interest rate last for, for example - and what does the interest rate revert to once the 0% interest period is over?
Commit to paying down the debt. Just because the interest payable is zero, doesn't mean you should let the debt sit there for months. Use this as an opportunity to pay off as much of your credit card balance as possible, before a higher interest rate kicks in again.
Before you move to a new credit provider, approach your bank and ask them if they can give you a better deal on your current credit card account or business credit cards. They may be able to wipe a few percentage points off your interest rate in order to retain your business.
About the Author
Peter Carville is a freelance article writer who writes for Financial Facts about the current financial news and the credit crunch.
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