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Top tips to benefit from balance transfer cards

Top tips to benefit from balance transfer cards

Category: Credit cards

Updated: 14/07/2014
First Published: 14/07/2014

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 It is now over 6 months old so the content may be out of date.

If you've overspent on your credit card and can't afford to repay the amount in full, you may want to consider switching it to a 0% interest deal - and with the ongoing price war on balance transfer cards, there's no better time. However, before you jump for that long-term option, there are a few things to consider so you can make the most of the card and get the best rates.

  1. The first thing you'll want to do is find out exactly what you owe and, therefore, what you'll be paying back. Do your sums, take a careful look at your monthly budget and, after all the essentials have been paid, work out how much you can comfortably afford to repay each month. Then, take the amount you owe and divide it by that monthly figure – this will tell you how long it'll take to pay off and, conversely, the length of the 0% term you need, giving you an idea of the deals you need to be looking for.
  1. Next you'll need to get onto the comparison and best buy tables to search out the best deal. There are some competitive lengths available but bear in mind that you may not get the very best deal if your credit score is not top notch, and remember that the balance transfer fee usually goes up the longer the term, so if you don't need the extra months then don't opt for them.
  1. Once you've found a deal, make sure you carry out the transfer in the timescale allocated then set up a direct debit to ensure the minimum payments are met each month. 0% doesn't mean no payments and if you miss one instalment the interest-free part of the deal is usually stopped, leaving you with a much higher rate. A missed payment could also have an impact on your future credit rating so make sure you're on top of things, but if you're in a position where you can overpay, then you could always take the opportunity while you can to get your balance paid off quicker. After all, you don't know when your circumstances may change.
  1. It's usually not a good idea to make further purchases on a BT card as repayments may go towards paying this off first, and spending will usually come at a much higher interest rate too – in other words, the 0% deal rarely applies to purchases, at least not for the full length. If you must spend (but consider first whether it is really necessary) then you'd probably be best taking out a 0% purchase card or looking for one that does both. Take a look at our comparison tables to see what's on offer.
  1. If towards the end of your deal you know you're not going to be able to pay it off in full before the 0% interest part finishes, don't delay and end up paying your lender a load of money when it reverts to their hefty standard rate – instead, make sure you switch to a new 0% deal before the rate ends. And after you have paid off your balance, stop using the card and don't be tempted to put more money on it or you'll be back to square one.

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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.