Take advantage of 0% credit card offers
2:39 AM
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.
Successfully managing this type of arrangement, however, requires much discipline - and in extending these offers to you, the banks are hoping 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.
When moving your debt across to their account credit card providers will also often charge a "transfer fee", which can be up to 3% of the total amount of debt. This means that on a 2,000 credit card debt, the transfer fee would be 60. Should you transfer two or more credit card balances across, you will be charged for the total number of transfers, so it's easy to see how these charges can quickly build up. Many introductory offers reduce or waive these transfer fees, but make sure you read the fine print.
Also, while these offers generally allow for a 0% interest charge on a monthly basis, occasionally they require that a monthly "finance charge" be applied to the account. This can be as small as 50p or 1.00, but again, it crucial that you read the fine print and understand all of the rule and conditions that accompany your new account.
Tips for success:
Read and understand all of the conditions attached to the balance transfer offer, so you know exactly what you're in for.
Ask plenty 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 think about moving to a new credit provider, go to your bank and ask them if they can give you a better deal on your current credit card account or business credit cards. They could possibly be able to wipe a few percentage points off your interest rate in order to retain your business.
Successfully managing this type of arrangement, however, requires much discipline - and in extending these offers to you, the banks are hoping 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.
When moving your debt across to their account credit card providers will also often charge a "transfer fee", which can be up to 3% of the total amount of debt. This means that on a 2,000 credit card debt, the transfer fee would be 60. Should you transfer two or more credit card balances across, you will be charged for the total number of transfers, so it's easy to see how these charges can quickly build up. Many introductory offers reduce or waive these transfer fees, but make sure you read the fine print.
Also, while these offers generally allow for a 0% interest charge on a monthly basis, occasionally they require that a monthly "finance charge" be applied to the account. This can be as small as 50p or 1.00, but again, it crucial that you read the fine print and understand all of the rule and conditions that accompany your new account.
Tips for success:
Read and understand all of the conditions attached to the balance transfer offer, so you know exactly what you're in for.
Ask plenty 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 think about moving to a new credit provider, go to your bank and ask them if they can give you a better deal on your current credit card account or business credit cards. They could possibly 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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