Transferring a credit card balance to a 0% deal may seem tempting, but it could cost you in the long run if you don’t have the discipline to keep transferring the balance before the promotional period ends. Even if you delay transferring by a couple of months the interest payments can soon add up. Ultimately any credit card balance has to be repaid at some time, so if you are not paying it off under a zero interest deal then you may struggle to do so once the interest rates soar.
There is also a great deal of time and effort involved in transferring balances, such as shopping around for the best deal and applying for a new credit card. A better idea may be to shift the balance to a credit card that offers a permanently low rate for balance transfers. By keeping the balance on one card account holders will also avoid paying the balance transfer charge that is applied each time that the balance is shifted to a new card account. In some case those charges can exceed 3%.
As the product is specifically designed for that purpose the rates on such cards are typically as low or in some cases may be even lower than personal loan rates. As a solution it provides a much cheaper alternative than carrying a credit card balance on a normal rate card, and therefore the balance can be paid off quicker.
Carrying forward a credit card balance at punitive interest rates of 20% plus, especially on store cards, can mean that it takes many years to pay off the balance. Using a low rate card and paying back even a few pounds more than the minimum payment each month can significantly lower the amount of time taken to totally repay the debt.
Also, using a low rate card to pay back a credit card balance can help the card holder get back on track when it comes to their finances. Reducing your overall debt gives you more financial freedom as less of your income will be needed to pay interest charges, and may lead to an improvement in your credit score.
If you are in the situation where you recently applied for a new credit card and have been refused you should get hold of a copy of your credit report to try and determine why. It could be that you simply didn’t fit the preferred customer profile desired by the credit card issuer, or it could be that some of the information held about you is incorrect. Check out your report, get any incorrect information corrected and then try again.
This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.
