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"Watching out for the catches with 0% balance transfer cards"

By admin | February 15th, 2008 | Balance Transfers, Credit Cards, General

Following the expensive Christmas and New Year periods many consumers have been looking to transfer their balances from their high interest credit cards onto 0% balance transfer cards, but experts are urging these consumers to watch out for the catches that comes with many 0% balance transfer cards so that they don’t end up paying over the odds for then privilege of transferring their balances.

It is estimated that by the end of January around one million cardholders had transferred their balances, with the average amount per person standing at over £2600. However, many are failing to consider the pitfalls of 0% balance transfers when transferring their balances. The cards allow cardholders to enjoy a longer interest free period within which to repay their transferred balance, but experts state that cardholders need to make sure that they compare a range of cards to find the most suitable one.

One ting that consumers need to look our for is the transfer fee that is charged by card providers, which is usually between 2-3% of the total balance being transferred. Consumers are also urged to resist the temptation to spend on the card, otherwise they will get caught in a debt trap, where their purchase balance, which will be charged at a high rate of interest, will become trapped behind the interest free transferred balance where it will continue to accrue interest whilst all repayments are applied to the transferred balance.

One official stated: ‘The main message for borrowers transferring a balance is always to read the small print and check out the way interest will be charged if you intend to spend on the card. Some cards offer a 0% deal for balance transfers and new purchases – but the majority impose different rates on the transferred balance and new spending. If borrowers know they need to keep using a credit card, it may be preferable to have two cards – one to clear a balance and the other for new spending.’

Tags: balance transfer fees, Balance Transfers, Credit Cards

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