Your Interest Payment Holiday Is A Great Way To Clear Your Credit Card Debt Once And For All

Category: Finance, Credit.

Making 0% balance transfer credit cards work for you. How do they work?

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. 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. Find the longest offer. 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. 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. How much will it cost me to transfer my balance?

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. 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. Make it work for you. 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 131 per cent( CreditAction. org) . 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. However, many people end up using it as an excuse to build up new debt on their cards.

Your interest payment holiday is a great way to clear your credit card debt once and for all. But balance transfer credit cards shouldn t be used for spending. Tiered payments. 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. Credit card companies allocate your repayments to different" segments" of your debt. Other traps. 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.

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.