Why Use a 0% Balance Transfer Card?

You will probably have seen many card companies offering 0% on balance transfers and they have become increasingly popular in recent years. Balance transfer cards can be extremely useful if you have an outstanding balance on one or more of your current cards and are paying interest on them.

By switching to a lender offering an introductory period interest free balance transfer card you can save a lot of money. Some lenders will even allow other debts like loans and overdrafts to be transferred to your new 0% account so it's wise to look for a lender offering this facility if that's an option that you want to take.

Make Your Repayments Count

If you switch to a 0% card try and pay off as much as you can possibly afford every month. Each payment you make during the interest free period will go towards reducing your debt and you will be surprised at how quickly the total amount you owe can be substantially reduced. You should be aware however that many lenders will charge a fee for balance transfers. This varies from company to company, some charge a one off fee of around £50, but the majority normally charge around 3% of the balance transferred. If you are transferring a large amount then these fees can become prohibitive and they could outweigh any advantage the 0% card offers, so make sure you know what these fees are before you sign up.

Avoid Purchases

You should also be cautious about making any new purchases with your card during the introductory interest free period. Most lenders' terms and conditions state that the interest free period only applies to the balance you have transferred, so any new spending may be charged at full interest. Any money you spend on your new card is put to the back of the queue when monthly repayment calculations are made by your lender. This means the interest on your purchases keep growing at a higher rate until your outstanding balance transfer is paid in full, which can outweigh the benefits of switching if you're not careful.

Have a Separate Purchases Card?

It could pay to have another credit card at a low rate of interest to use in emergency or for small expenditures rather than accrue increased high interest fees on your balance transfer account.

Don't be Caught Out - Get a New Card in Time

When the interest free period in your balance transfer card is about six weeks away from expiring apply to a new lender to switch any remaining balance to a new balance transfer card and continue to do this until you have cleared any outstanding balance.

N.B. Be sure to apply for a new balance transfer card at least six weeks before your current card runs out as it can take up to a month or so for paperwork to be processed and new cards and pin numbers to be issued.