Are 0% Balance Transfer Credit Cards Good?

by : Carol Bell

You have probably seen them advertised, maybe even thought about getting one, but are the 0% credit card deals really as good as they seem? Yes it seems like a good deal, transfer the balance of your existing credit cards and get charged no interest for the following six months. Think how much money you could save. Be careful before you sign the application form be sure to read all of the small print. The 0% rate credit card might not be such a good deal.

In a review of 0% rate credit cards I have noticed that many have a transfer fee of some kind. Although you will not pay any interest on your transferred balance for the agreed period, the credit card company will charge you a fee of around three percent. On a transfer of five thousand pounds this works out at around a hundred and fifty pounds. This is something to take into consideration when working out if a 0% rate credit card will be of benefit to you.

Although there are disadvantages with the 0% rate credit cards the benefit of having to pay no interest for six months or so could be of great advantage in many cases. If you plan to use the card for an item, which you can afford to pay for in six monthly installments, congratulations your purchase will be interest free. The 0% rate credit card will also be of benefit if you do not normally carry a balance on your credit cards you can now run up a balance and earn some building society interest on the amount you would otherwise have paid. Settling the full balance at the end of the six months interest free period.

Normally, 0% annual percentage rate or APR lasts only for 6 months. The countdown starts from the day the credit card is claimed not the date that your existing credit card balances are transferred. In most cases it will take a while for the credit card companies to complete the transfer so you will probably not receive a full six months interest free period. Whilst you are saving money by paying no interest for the first six months check the APR of the subsequent period. Not many people will be able to manage to pay off their credit card debt in six months and if you will be paying a higher interest rate than you are at the moment this too will reduce the initial savings.

If you take out a 0% rate credit card with a new company your old card or cards won't be canceled unless you actually go and cancel them yourself. This means that your old card with its full credit limit is still available. It is so easy to start running up a balance on the old cards as well as using the new one and finding yourself in even more debt than you were in before. So if you take out a new 0% rate credit card be sure to cut your old cards up so that you are not tempted to use them.

Indeed, there are benefits of getting a 0% Balance Transfer credit card, mainly for people who can manage their money well and can keep transferring from one 0% Balance Credit card deal to another. For most people there are real dangers that switching to a 0% Balance Transfer Credit Card will get them deeper into debt. The best 0% reward is not to have a credit card at all or to have one with a zero balance.