In the UK, balance transfer credit cards are a very popular form of credit for people who want to move their debt around to get the greatest interest rates. We looked closely at what they are, and the merits of balance transfer cards.
What Are They?
Due to their clear appeal, balance transfer cards are a common choice. Transferring money to a new card is quite helpful for folks who are paying interest on a credit card. A card that won’t charge interest on the balance for the duration of the introductory deal, which could last up to two years. This concept is obviously enticing because it may end up saving the borrower hundreds of pounds.
These cards allow people to move debt around in order to avoid paying interest. Therefore, purchases made using these cards are considered to be interest-free loans. Well, almost; as you’ll see below, the service isn’t really cost-free. On the other hand, these cards might be incredibly valuable.
Merits Of Balance Transfer Cards – Uses
To take advantage of the credit card offer system to the most, some people apply for two different credit cards. One is for purchasing, while the other is for transferring balances. On the other hand, certain cards provide incredible discounts and low rates on both purchases and balance transfers.
For instance, if you used a 0% credit card for a year to pay for a £3,000 vacation, you might set up a direct debit to pay £250 each month. By paying off the debt before the 0% interest offer expires, you could be able to use the card to borrow money at no further cost in the future. Even worse, you might simultaneously charge another card with additional debt.
Merits Of Balance Transfer Cards – Little In Life Is Free
On the other side, transferring a balance is rarely completely free. Determine whether the handling fee will be less than the interest you would pay on the debt if it remained on its current credit card. In the present market of the amount being transferred, there is often a “handling fee” of between 3 and 4%. For instance, handling fees would be £80 for a transfer of $2000 if the rate was 4%. The cost of such debt would rise to about £33 per month if you paid 20% annual interest on it.
On rare occasions, a provider will waive transfer fees yet charge an annual card cost. The terms and conditions for any card should always be read.
Persistent Debt
While the majority of credit cards are free to apply for, you will incur costs if you miss or are late with a payment or if you go over your credit limit. Get assistance immediately away if you think you might be having difficulties paying your expenses. Two organisations that offer free debt help are National Debtline and Step Change.
