A dozen in five years

Rate tarts: people who change credit cards at the ‘drop of a hat’ to take advantage of extremely low interest, or interest free, periods on different cards.

To notch up a dozen or so cards in the space of say, five years, is common. A rate tart could be swapping cards every few months depending on what’s available and could end up with a whole handful of active cards.

Then what?

A case of discipline

There are issues with being a rate tart. Not the least of which is having the discipline to destroy the old card when you move your balance from one card to the next. Some people have got themselves into real financial difficulty by switching cards and then using the old cards as well as having the zero percent interest in the new card.

The golden rule

Simple: don’t ever use the card you switch your outstanding to for anything except debt consolidation at the lowest interest rate possible.

If you do ever use a card for another purchase then any repayment onto that account will not go to pay off the sum earning the highest interest it will go to reduce the zero interest portion. So any savings you may have made by transferring to the new card will be instantly lost.

Timely payments

Even more important is to pay on time each month. One of the conditions of the offer is that payments are received by the due date every month. Saying that you lost the statement isn’t going to influence the credit card company and it’s a sure-fire way to get a late payment penalty and even your interest rate hiked up.

I’m in too deep

Being a rate tart can sometimes be a way of lessening the pain of acknowledging the debt you have. The thought process goes something along the lines of, “It’s OK because it’s not costing me anything to have these thousands of pounds on my credit card.”

Well, the truth of the matter is that actually all you are doing is delaying the day when you will have to face up to the debt and start to think about how you are actually going to pay it back.

It’s not yours to keep

Credit cards are not your money. They are a simple way to borrow somebody else’s money. And that somebody else will want their money back sooner or later. In effect you are really surfing for free credit.

Works like a dream

Credit cards and being a rate tart needn’t be a nightmare. Some people are able to really play the system. It has been known for people to take advantage of a zero percent loan on a credit card, use that money to pay into their offset mortgage account and effectively pay part off the monthly interest incurred on that beast.

With interest free periods on offer up to a year at a time that can really make sense. But you have to really know what you are doing and it isn’t recommended for the faint-hearted!

Rate tart or financial innocent?

At the end of the day if you are a rate tart it appears that you, like millions of others, are playing the system for what its worth. Whether you are in financial trouble or making the most of what the market has to offer it has been estimated that these zero rate cards cost the industry £1bn a year in lost revenue.

Zero percent was introduced to encourage customer loyalty and to nurture new business. Quite how the credit card companies thought that was going to work remains a mystery.

The availability of easy loans is a tempting offer. But when these rates cease and rate tarts are left stranded without their zero percent, like a bride deserted at the church, hopefully it won’t end in tears for everybody.