In the current financial climate, many of us are looking for ways in which to reduce our debts and save money. If you're looking for a new UK credit card and you have balances left to pay on other credit cards or store cards, you may want to consider applying for a credit card that allows balance transfers.
What is a Balance Transfer?
Making a credit card balance transfer means that you transfer your debts with other credit cards and store cards to your new credit card. You simply provide the details of your other credit cards and store cards to your new credit card provider, and the balances will be transferred to your new card.
The Benefits of Balance Transfers
The main benefit of a balance transfer is that it can save you money and therefore allow you to clear your debts in less time. In order to make the most of a balance transfer facility, you will need to look for a card that offers 0% balance transfers. This means that for a specified time, you won't be paying interest on your transferred balance.
This doesn't mean that your monthly payments will be cheaper, as you will have to pay at least the minimum monthly repayment set by your card provider. However, it does mean that your money will be going towards paying off your debt, rather than paying interest, so this will mean that you can pay your balance off quicker.
A second benefit of a credit card balance transfer is that, as you can transfer the balances from a number of credit cards and store cards to your new credit card, it can make it easier to keep track of your finances.
Balance Transfers - Things to Look For
Here are some hints and tips on what to look out for when choosing a credit card in order to transfer your balances from other cards:
· Make sure that you choose a card which offers a long 0% balance transfer period. Different providers offer different 0% interest periods on balance transfers, so compare them before applying for your new credit card.
· Check to see what fees you will be charged for transferring any balances to your new card. Most providers will charge a percentage of the transaction amount, so compare charges before choosing a credit card.
· Check to see what the annual percentage rate (APR) is on any card that you're considering. When you have reached the end of your 0% interest period, you will need to pay the card's standard APR on this balance, so make sure that it is competitive.
· Make sure that you can afford to pay at least the minimum monthly repayment each month, as if you pay your bill late, your credit card provider may cancel your 0% interest balance transfer arrangement. Check the terms and conditions applicable to any credit card before applying, as breaching them may also result in cancellation of the 0% interest deal.
· Make sure that you know the order in which your card provider will apply payments to your account. Most card providers will use the payments that you make to pay off your transferred balance first, so if you make any new purchases on your card, they could prove to be expensive. If you do intend to use your new card to buy things, look for one that offers a 0% interest on purchases period.
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