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Credit card balance transfers
Understanding Credit Card
Balance Transfers

You may have heard the term 'credit card tart' before, but do you know what it means?  Are you in fact one yourself?  If you shift balances from card to card every time the 0% interest deal runs out, then you are a credit card tart.  Card hopping to make the most of credit card balance transfer deals isn't as attractive as it used to be – thanks to the fees that are now charged for transferring a balance – but it can still save you money if you are currently paying a huge amount of interest on your existing balance.

If you're thinking of transferring a balance from an existing card to a new one, it's worth thinking carefully before you do it.  Credit card balance transfers can save you money, but if you get them wrong, they could also cost you dearly.

Why go for balance transfers?

This is perhaps the most important question to ask initially.  There should be a good reason for wanting to do a credit card balance transfer.

If you have a significant balance which is going to take you some time to pay off, then it's worth looking around for a better rate, and transferring a balance.  Look for credit cards balance transfer deals which offer a 0% deal and go for the longest period of time you can get.  This is usually between six and nine months, although you can get up to a year if you're lucky.

What are the advantages of credit card balance transfers?

Good credit card balance transfers can give you some breathing space to sort out your finances.  They can also enable you to pay a bigger chunk off an existing debt before the 0% deal runs out.  In some cases (depending on the amount of debt you have and what you can pay off it each month) you may be able to clear the debt altogether by transferring a balance.

Depending on the credit limit you are given, you may even be able to do credit card balance transfers from more than one card.  This will give you an even better chance of clearing your debt and saving money in the process.

What are the disadvantages of credit card balance transfers?

The main disadvantage of transferring a balance is that you will usually pay a balance transfer fee.  This is generally added to your transferred balance, meaning it is added to your overall debt.

It's very important that you work out what this credit card balance transfers fee will be, and whether the amount of interest you will save each month will be enough to wipe this fee out over the course of the 0% interest deal.  If it isn't, then it's not worth transferring a balance.

You also need to be careful that the company which provides your card isn't the same parent company that your existing card balance is with.  If it is you won't be able to do any credit card balance transfers, because they don't allow them to be performed between cards which are both issued by the same company.

In short, transferring a balance can give your finances a huge boost if it's done correctly.  The best route to successfully performing credit card balance transfers is to do your research before making any applications.  That way you are assured of making the right credit card balance transfers decision for you.

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