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Making the most of 0% credit card offers

Todays Date: December 16, 2018

An ideal solution for those who are looking to get their finances under control and reduce their overall debt position would be opting to transfer your credit card balance to a 0% interest card.

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!

Firstly, it’s imperative that you read all of the conditions attached to the 0% card offer. In order to regain the lost interest revenue, the credit provider may charge higher late payment, over limit or missed payment fees, which could cancel out the benefits you may 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 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.

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. Even though the interest payable is zero, it doesn’t mean that you should let the debt remain there for months. Take this as an opportunity to repay as much of your credit card balance as possible, before a higher interest rate has a chance to kick in.

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.

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