Stay one step ahead with balance transfer credit cards
You’re probably aware that the reason you credit card payments are so high every month is a combination of two things – your outstanding balance and the interest you’re paying on it. But did you know that by switching to a credit card with an offer on balance transfers, you can cut your monthly payments and save yourself money?
Our handy guide to balance transfer credit cards will tell you all you need to know, so why not take a few minutes to sit down and relax as you read it.
Choosing the right card
The card you choose will depend on what offers are available at the time, your preferred bank and a variety of other factors such as card terms & conditions, interest rate and your current balance. Balance transfer credit cards usually offer you 0% on balance transfers for a set period from the date you open the account – this could be anywhere from 3 months to 24 months. You’re not limited to the High Street banks when it comes to balance transfer credit cards though; some of the major supermarkets such as Sainsbury’s and Tesco have great 0% offers available throughout the year.
What does it cost?
Of course, there is a cost involved when transferring your balance to a new card – most balance transfer credit cards charge a fee as a percentage of your outstanding balance. This can vary depending on the card you use, so it’s a good idea to use a comparison website such as MoneySupermarket. This will allow you to view credit card offers side by side so that you can see what their fee is, how long the interest free period is on balance transfers and what their APR is for comparison.
Watch out for APR
If you’re transferring a large balance, it’s important to work out roughly how long it will take you to clear it. For example, transferring a balance of £5,000 to a balance transfer credit card with 12 months 0% on offer is great, but will you be able to pay off the balance in that time? You’ll also need to check what the APR on the new card is, as this will be applied to your outstanding balance once the 12 month period is over. This is why it’s best to choose a credit card with a lower APR than your current card, unless you’re transferring a small balance which will be paid off entirely in the interest-free period.
Balance transfer credit cards are a great way to reduce your expenditure in the New Year, or at any time of year, and if you have several credit cards, switching them all to a 0% interest rate could save you a considerable sum of money. Just make sure you compare the cards on offer to make sure you get the deal that’s best for your individual circumstances.