How long offer is valid for ?

There is usually a cut off point from account opening when offer is no longer valid. Be very aware of this otherwise you could end up transferring a balance to a higher rate !!

What about new purchases ?

Unless there is also a 0% interest rate on new purchases then you should avoid making new purchases on a balance transfer card. This is because banks will look to reduce balance transfer debt quicker than new debt. Provided your credit history is reasonable, there is nothing stopping you having several cards for different purposes. A good way is to have a card, which specialises in 0% on new purchases and another card for balance transfers.

What happens when balance transfer period finishes ?

When balance transfer offer period finishes debt will revert to typical variable APR. The lenders hope at this point that cardholder will retain card and some of debt, so they can then start charging interest and making some money! So take into consideration low interest rate credit cards. However, there is nothing stopping disciplined credit card holder from switching to another balance transfer deal and closing account. The cycle then starts again. Always allow 6 weeks to 8 weeks before end of offer period to apply for a new card. This means you can get balance transferred to new card before lender can start charging higher rate. You have to be organised to do this, but if you are it does work. People who regularly switch balances are know as card tarts.

The Golden Rules

There are three things to look out for with a balance transfer card

• As mentioned previously, unsuspecting can get caught out when spending on a balance transfer card.
• Maintaining regular payments. If you miss a payment you incur some penalty, so be aware. To be safe set up a direct debit.
• The interest rate applied when offer period finishes.

It is often case that credit card companies will offer both balance transfer and 0% on purchases on same card. When this is not case it is wise to keep balance transfers and purchases separate. This is because balance transfer portion of an outstanding balance will be paid off quicker than standard rate purchases. Therefore an increasing portion of balance will be subject to standard rate and balance transfer portion will decrease at a faster rate. There is nothing to stop a consumer obtaining a credit card with a balance transfer and a separate low interest credit card for any purchases to be made. That way benefits of offers are maximised.

In summary balance transfer and 0% purchase offers can be of great benefit to consumer provided that consumer understands how to use offers to their advantage. A degree of discipline is required in managing repayments. Also, cardholder should be aware of any penalties that may cause offer to be cancelled. Armed with this knowledge then these cards can be made to work for consumer, but remember that when comparing credit cards to pay close attention to typical APR, which is, always stated where UK credit cards are promoted.