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Category: Credit cards Date: 12/30/2010
So Christmas has come and gone. But as the haze of seasonal cheer begins to recede you notice that your credit card is sitting heavier in your wallet than it did before. The date of your next statement is looming large and the prospect of repaying your festive debts has you reaching for the headache tablets.
If you have racked up a balance on a credit card charging a high rate of interest on purchases, now is the perfect time to see how a 0% balance transfer card can provide a tonic for your 2010 debt hangover.
The best card on offer? That'll be the Barclaycard!
Barclaycard are now offering the longest introductory 0% balance transfer period at 17 months, with their Platinum with Balance Transfer Visa.
Not only this though, if you apply for the card and transfer balances of £3,000 or more before 31 January 2011, you'll get £20 off the Balance Transfer Fee!
So not only is Barclaycard offering the longest introductory period, it's also effectively offering the lowest Balance Transfer Fee for balances of £3,000 or more (for a full comparison of how £20 off the Balance Transfer Fee compares to the Virgin Money Credit Card MasterCard and the MBNA Platinum 16 Month Visa, click here).
Why the Barclaycard Platinum with Balance Transfer Visa may not be suitable for you…
If you earn less than £20,000 per year, the Barclaycard deal is not available – although you may find you can apply for the Virgin Money Credit Card MasterCard or the MBNA Platinum 16 Month Visa as these cards don't have minimum income restrictions. Be careful not to apply for more than one card though: making several credit card applications at the same time may jeopardise your chances of getting accepted for any of the cards you apply for and will also affect your credit score.
Make a Repayment Plan
The great flexibility of a credit card is also its greatest danger. Because you can 'get away' with only making the minimum repayment each month, it can seem like you are borrowing money for a lot less than another form of borrowing, such as a loan.
However, although your minimum payments may be much lower than the monthly repayment on a personal loan, you will be paying them over a far longer term, and therefore will pay a lot more in interest. You should always try to pay off more than the minimum payment each month.
A 0% Balance Transfer card shouldn't be seen as a way to defer thinking about how you will repay your debt. It should instead be seen as an opportunity to pay as much of your debt off as possible, whilst it is costing you (in interest) the least. A long 0% Balance Transfer credit card, like the Barclaycard Platinum with Balance Transfer Visa, gives you the opportunity to repay your debt efficiently, before you have to think about either transferring again to another card, or face biting the bullet and paying interest on whatever remaining balance you have.
For example, if you have a balance of £1,700, paying £100 per month off your card during the initial 17 month 0% balance transfer term with Barclaycard will mean that your debt will be repaid without you paying a penny in interest.
So make the most of the opportunity! It's always a good idea to set up a Direct Debit for the minimum payment on your card to ensure you don't miss any payments. You should consider also paying a further amount monthly. You could do this manually as you can afford to, or by setting up a monthly Standing Order from your current account.
A 0% balance transfer card allows you to move costly debts from credit or store cards, onto another credit card where you don't get charged interest for a set period.
As you're not paying interest you have the opportunity to really pay down your debt and save money.
Credit card providers tend to levy a Balance Transfer Fee (typically 3% of the amount transferred), when you transfer your balances across to your new card. However, paying a one-off 3% fee, as opposed to a double digit rate of interest, in most cases will work out far cheaper.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at anytime.