If you owed money on a credit card in the past, I'm talking about 15 or even 20 years ago, the best thing to do would be to pay off all the debt as soon as possible. Now there are great things like the Balance Transfer Offers - where credit card companies provide a lower or zero percent rate on any balances you transfer from other credit cards.
The balance transfer credit card is certainly a recent evolvement in the credit card market; initially credit card companies only offered a lower rate of interest to customers transferring a new balance. These initial offers were around 4 to 6 per cent APR on new balances transferred from other credit cards. Now there are a host of 0 per cent offers to choose from ranging from 3 months right up to 14 months. Many of the 0 per cent balance transfer credit cards also offer zero per cent on purchases for a small amount of time, usually around 3 months.
However, before you leap straight into signing up for a zero per cent credit card, as with anything else, you should always read up on the full terms and conditions of the product. For example always find out about any fees or charges like late or missing payments, what happens when you're 2 or 3 days late sending your payment? Some credit card companies charge upto ?20 every time a payment is missed!
Most, if not all, balance transfer credit cards charge what is called a balance transfer fee. This is something that has only recently been implemented by the card companies. For the last 5 or so years customers have simply switched from credit card to credit card every time their balance transfer period came to an end, at no cost. In the last year card companies have introduced a fee on any balances transferred. Typically the fees charged range from 2 per cent to 3 per cent of the balance transferred. In the short term this may seem rather expensive, 3 per cent on say a ?6000 balance is ?180. However over the course of a year it works out much more competitive than paying the average credit card APR of 16 per cent, in interest!
Finally, make sure you make a note of the exact date your balance transfer period ends. Then, give yourself at least 1 months notice in order to search the market for a new credit card and have time to apply and transfer your balance once again. Whatever you do, don't let the balance transfer period end while you still have the debt on that card, otherwise your 0 per cent could turn into 16 per cent APR overnight!
