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Have your credit card cake and eat it……

Have your credit card cake and eat it……

Category: Credit cards

Updated: 23/09/2010
First Published: 22/09/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

We've all been there, despairing at the rate we're paying on our credit card balance while decrying the interest level which we're charged on purchases.

Well, perhaps not all of us, but for the less financially organised among us, salvation could be just an application away.

That's because increasing numbers of credit cards are popping up on the market that offer holders both the luxury of a 0% balance transfer period in addition to a 0% purchase period.

While they offer better rates on spending, you should still budget carefully, paying off all or as much of your balance as possible each month, as you would with a regular credit card.

Failure to do so could leave a sizeable balance at the end of the 0% term, at which point the old enemy of interest will once again rear its ugly and costly head.

You could always apply to switch the balance again of course, although there are no guarantees that it will be accepted.

In a similar vein, if you are carrying over a decently sized balance from your previous credit card, it is worth working out how much you need to pay off each month to clear you balance before the 0% period comes to an end.

For example, should you owe £2,300 and you have 12 months in which to pay it off, a monthly payment of £192 a month would clear it.

To be sure of making payments every month – failure to do so will likely see that precious 0% rate pulled – set up a direct debit for the amount you need on a date when you know the funds will be available, on pay day for example.

Now, if you're strictly looking for a card to pay off your balance while not incurring any more interest, your best bet may still be to take a more traditional transfer card in a market that offers holders up to 16 months to clear their debts.

However, if you'd like to combine some interest free spending with 0% repayments, then there are a number of options to consider.

All will charge a fee for transferring a balance, typically of around 3%, so bear this cost in mind when you are applying.

If you shop regularly with Tesco, the Tesco Clubcard Credit Card could appeal. It offers 0% on all purchase for 13 months and 0% on balance transfers for nine months.

Holders are also awarded one point for their Clubcard for every £4 spent on the card.

If you'd like the same amount of time for both you purchase and balance transfer periods, the Virgin Credit Card is worth consideration.

An ever present at the top of the credit card market, Virgin offers a full 12 months for both purchases and balance transfers, so you know where you are at all times.

If you're looking for a card to pay off your balance in quick fire fashion, the aptly named Halifax All in One Credit Card is hard to beat.

And as well as the 10 month 0% balance transfer period in which you can clear your balance, holders can also make purchases for 10 months without added interest.

Or if you're on the road a lot, why not add credit cards to your list of AA services.

Once dubbed the 'fourth emergency service' AA has branched into personal finance with great effect in recent years, and the AA Credit Card could get you on the interest free road, offering 0% on all purchases for 12 months and 0% on balance transfers for nine months.

You can also earn AA Rewards Points on your spending, which can be used to purchase a range of products and services.

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 any time.