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Balance Transfers

If you have a high interest rate credit card with a lot of debt on it - then it can be a good idea to transfer your debt to a 0% credit card. It sounds like a no-brainer to do that, but many people (my wife!) don't realise there is a fee to transfer the debt over, which is usually dependent on the debt you have. Not mentioning any names - some people think they are doing something clever when actually they might end up paying more money overall by transfering the debt. In short you need to do the maths to work out if you are getting a good deal or not. You can use a balance transfer calculator if your maths isn't up to the job.

There re other benefits to transferring your balance to another credit card - you might want to consolidate your debt - this simply means for example if you have 5 credit cards (naughty!) and you transfer all the debt from those cards to just one - then you have consolidated your debt! Whether it saves you money in doing that is another matter entirely - of course you make it a lot easier to manage your debt on one card and you reduce your paperwork dramatically. By doing this you can reduce your charges if you commonly miss your minimum payments - these can stack up as well making you feel pretty sick at paying a charge and not getting anything tangible for it.

As well as credit cards you may also be able to transfer loans to your new shiny card.

Just remember that when you transfer your balance over to check what the APR will rise to after it's initial offer has run out. If you can pay off your debt (are you sue you can?) then I guess it doesn't matter what the new rate is; but beware if you can't and you find the rate is astronomical.

Most of the time the great APR rate you will be getting on your balance transfer will ONLY apply to your balance transfer - so make sure that you pay in full for new transactions on your card or you may end up paying a lot more money than you had thought. Also before you get this new card make sure you can make payments on the new transactions first - some cards make the payments pay off the transferred debt first - meaning that all your new transactions are incorporating the big APR rate from the get-go (gulp!). Some cards will make your monthly amount pay evenly across new purchases as well as your transferred balance, which is still not ideal. Check to see if your card applies the great rate to new purchases as well, you may get interest free for the first 6 months on these as well (great if you can get it).

Be watchful of continually transferring your balance - if you continually move your debt to a new card everytime the good rate offer goes then your credit rating can turn sour; when it finally comes to buying a house or a shiny new car - you might find that you cannot buy it due to a poor credit rating.

So apply for a balance transfer now and you'll have your new shiny plastic card within a month.


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