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Credit Card Balance Transfers

Credit card balance transfers allow those with debt to move it around to avoid exorbitant interest charges. We took a look at what is involved, and whether they are a good idea for those who owe money.

Credit Card Balance Transfers – What They Are

Because of their obvious appeal, balance transfer cards are a popular choice. The ability to transfer funds to a new card is quite useful for consumers who are paying interest on a credit card. A card that will not charge interest on the amount for up to two years as part of an initial offer. This is a tempting concept because it may save a borrower hundreds of pounds.

These cards can be used to move debt around and avoid paying interest. As a result, purchases made with these cards are considered zero-interest loans. Well, almost, since, as you’ll see below, the service isn’t really free. On the other side, these cards can be quite valuable.

How To Utilise Them

Let’s have a look at how these cards could be used in the future. You might set up a direct debit to pay £250 every month if you paid for a £3,000 vacation with a 0% credit card for a year. As a result, you may be able to pay off the loan just before the 0% interest offer expires, allowing you to borrow money at no further cost.
You could even use another card to pay off other debts. Furthermore, if you pay off the outstanding balance during the 0% term, you will not be charged interest.

Credit Card Balance Transfers – Nothing In Life Is Free

Transferring a balance is almost never completely free. There is usually a “processing fee” of between 3 and 4% in the current market of the amount being transferred, therefore the key is to see if the handling price is less than the interest you would pay on the debt if it remained on its existing credit card. If you were charged 4% on a £2000 transfer, for example, you would be charged £80 in handling fees. If you paid a 20% annual interest rate on that debt, it would cost you roughly £33 each month.

Occasionally, a provider will offer free transfers in exchange for an annual card cost. Always read the terms and conditions of any card before using it.

Don’t Ignore Debt

While most credit cards are free to obtain, you will face financial penalties if you are late or miss a payment, or if you exceed your credit limit. If you think you’re having difficulties paying your expenses, get help as soon as possible. Two organisations that offer free debt assistance are National Debtline and Step Change.

 

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