Related Credit Card Article

"The End Of The 0% Deal? Lifetime Balance Transfers May Be The Answer"

By admin | July 24th, 2009 | Credit Cards, Featured

Since the credit crunch began to bite, the overall number of 0% balance transfer offers has dropped dramatically. ‘Credit card tarts’ are finding it more difficult to find good deals out there. Not only are there fewer providers offering the deal, but the deal terms are getting shorter on average.

Also, nowadays there is no such thing as a fee-free balance transfer. Average fee tends to be around 3% which is added on to the debt. In real terms, this equates to an interest rate of 5.7%. So it isn’t really no-interest, but low-interest, with transfer fees subsidising the cost of providing 0% interest.

But still, these deals are the biggest loss maker for credit card providers and with the release of the consumer white paper, providers are going to cut costs when the proposals are made law. Realistically, this may mean the end of the 0% balance transfer for good.

However, 0% balance transfers, although the friend of ‘rate tarts’ and previously (before transfer fees and when 0% was really 0%) ‘stoozers’, they’re not for everybody anyway. As well as transfer fees, 0% balance transfers require that you be very disciplined. At the moment, if you spend money on a credit card with a 0% balance on it, any payments you make will go towards the 0% balance first, not the new balance which is having interest charged on it (although this practice of payment hierarchy is set to be outlawed), so you need to be careful not to spend anything extra.

You also need to be ready to swap to a new deal when your current deal period ends or you will start paying interest (currently about 1.4% monthly). On average, this means a swap and a new card- and new balance transfer fee – every ten months. Also, some cards operate ‘traps’ such as removing you immediately from your 0% deal if you make a payment late.

So what are the alternatives? Well, a personal loan could pay off all your current debt if you’d like to get rid of your cards before good deals get harder to find, but at upwards of 7.9% APR, they aren’t a cheap option and the monthly payments are fixed. If you want to cut the hassle of tarting about every few months and the flexibility to pay more towards your balance whenever you’re feeling a little more flush, consider switching to a lifetime balance transfer card. At rates starting at 6.8% applied until the balance is paid off, they’re cheaper than personal loans and less hassle than switching cards all the time.

Bear in mind however, that a balance transfer fee will apply (around 3%) and some cards charge an annual fee. If you’re prepared to pay over your minimum payment when you can, they can be a good long-term option to reduce your overall debt. It might be worth getting in now while these good deals exist and before the credit card companies feel the effects of belt-tightening.

Tags: Balance Transfers, interest free, stoozers, stoozing

Related Articles:

• Balance transfer fees could be set to fall

  According to recent reports the fees charges on balance transfer credit cards could be set to fall in the future, as lenders try and battle it out to increase custom by using a new form of incentive. In the past the incentives have included the headline interest rate and freebies for new customers. However, with...

• A Quick Guide to Balance Transfers

  In the ever more competitive world of credit cards, balance transfers are the most effective means of which to lure new customers. This is, of course, good news for consumers as, in a bid to win your custom, some companies are offering up to an incredible 12 months interest free on balance transfers as...

• Number of balance transfer deals halved in four years

  It has been claimed in a recent report that the number of balance transfer deals available in the UK has halved. Balance transfer deals became very popular over the years, as they enabled those with high interest existing credit card debt to transfer the high interest balances onto a 0 percent credit card, which would...

• Are price comparison sites likely to get you the best deal?

  Over the past couple of years many different price comparison websites have sprung up all over the Internet, claiming to provide speed, ease, and convenience for those looking for the best deals on a wide range of products and services. You can purchase all sorts of products and services through price comparison sites these days,...

• Rate tarts could experience difficulties due to transfer fees

  A recent report has indicated that credit card rate tarts could experience increasing problems as a result of fewer and fewer balance transfer credit cards capping the transfer fee that is charged. In the past many of these credit cards charged a fee of between 2-3% of the amount being transferred but capped the fee...

Other Recent Articles

Cash back credit cards set to become increasingly rare

The rewards based credit card has become very popular over recent years, particularly amongst those that tend to repay their...

By admin | March 9, 2010 | Read More

Capital One customers hit by huge increases on credit cards

According to recent reports many credit card customers that have cards with Capital One have been stung with huge increases...

By admin | March 5, 2010 | Read More

New high for credit card interest rates

Recently released figures have shown that credit card interest rates in the UK have reached a new high, despite the...

By admin | March 3, 2010 | Read More

Credit card firms reject many proposals

A number of proposals have been put forward recently to try and increase fairness for credit card customers, with the...

By admin | March 1, 2010 | Read More

Credit cards could be the ideal solution for holidaymakers

It has been suggested in a recent report that holidaymakers and those that travel abroad for any other reason could...

By admin | February 25, 2010 | Read More