0% credit card offers need second look
There are two types of 0% credit card offers that may interest the discerning customer with 0% on cash purchases and 0% on balance transfers. They sound similar but they work in very different ways, with each one suited to specific types of customers with different requirements. So how can these offers benefit you and your finances and help you reduce the cost of borrowing? If you are scratching your head over the myriad deals on offer, then here are a few guidelines that may help you reach the right decision.
If you have an existing balance on another credit card that you are paying interest on, then a 0% balance transfer card may be your best option. With balance transfer offers, you can move the balance of your existing card onto a new card and not have to pay interest for a period of time. If you have a card with an average APR of around 15.9% then this saving can be substantial. The average 0% balance transfer period is now at least 10 months, which gives you plenty of time to make an interest-free dent in your existing balance. However, you do need to be aware that there is usually a transfer fee of around 3% on balances transferred onto 0% cards.
In 2006 £133.2 billion was spent on credit cards in the UK and this amount keeps rising every year. If you are one of the many people who spend regularly on credit cards, and haven't kept up with the payments quite as well as you had hoped, then you will be able to see how this type of card can help you financially. It gives you a chance to halt interest charges completely and pay off your debt, rather than just paying off a small amount of the original balance and a large amount in interest payments each month. If you are one of the people barely making your minimum payments each month, this could make a big difference to your finances.
The 0% on cash purchases card is completely different. This type of 0% credit card allows you to make purchases on the card without any interest being added to that amount for a specific period. Although these offer periods are shorter than the 0% transfer cards, it is still a reasonable length of time. Currently the average interest-free offer is around 3 months.
By understanding how the two 0% credit card offers actually work, you should be able to work out how to combine the two offers. It is possible to get a 0% cash purchase card, buy something relatively expensive, pay some of it off, and then transfer the remaining balance onto a 0% balance transfer card and then pay off the outstanding amount. For example, you could purchase something for £3000 and pay it off over 15 months at just over £200 a month, remembering to take into account the transfer fee. Managing your credit like this does takes a lot of planning, though.
Both types of 0% cards have their uses and both can help financially in different walks of life. As with all credit cards, 0% credit cards can be applied for online. When applying for a new card you will need to take a long, hard look at your credit rating. Your credit rating is a record of credit information held by the three credit referencing agencies. It is this record that financial companies use when deciding to offer you credit and determines whether you will be accepted as a customer. To compare credit cards you can always visit a price comparison site that lists all of the major companies and other less well-known cards in an easy to use format. Once you have done this you can simply apply for the card.
If you have an existing balance on another credit card that you are paying interest on, then a 0% balance transfer card may be your best option. With balance transfer offers, you can move the balance of your existing card onto a new card and not have to pay interest for a period of time. If you have a card with an average APR of around 15.9% then this saving can be substantial. The average 0% balance transfer period is now at least 10 months, which gives you plenty of time to make an interest-free dent in your existing balance. However, you do need to be aware that there is usually a transfer fee of around 3% on balances transferred onto 0% cards.
In 2006 £133.2 billion was spent on credit cards in the UK and this amount keeps rising every year. If you are one of the many people who spend regularly on credit cards, and haven't kept up with the payments quite as well as you had hoped, then you will be able to see how this type of card can help you financially. It gives you a chance to halt interest charges completely and pay off your debt, rather than just paying off a small amount of the original balance and a large amount in interest payments each month. If you are one of the people barely making your minimum payments each month, this could make a big difference to your finances.
The 0% on cash purchases card is completely different. This type of 0% credit card allows you to make purchases on the card without any interest being added to that amount for a specific period. Although these offer periods are shorter than the 0% transfer cards, it is still a reasonable length of time. Currently the average interest-free offer is around 3 months.
By understanding how the two 0% credit card offers actually work, you should be able to work out how to combine the two offers. It is possible to get a 0% cash purchase card, buy something relatively expensive, pay some of it off, and then transfer the remaining balance onto a 0% balance transfer card and then pay off the outstanding amount. For example, you could purchase something for £3000 and pay it off over 15 months at just over £200 a month, remembering to take into account the transfer fee. Managing your credit like this does takes a lot of planning, though.
Both types of 0% cards have their uses and both can help financially in different walks of life. As with all credit cards, 0% credit cards can be applied for online. When applying for a new card you will need to take a long, hard look at your credit rating. Your credit rating is a record of credit information held by the three credit referencing agencies. It is this record that financial companies use when deciding to offer you credit and determines whether you will be accepted as a customer. To compare credit cards you can always visit a price comparison site that lists all of the major companies and other less well-known cards in an easy to use format. Once you have done this you can simply apply for the card.
About the Author:
Josh White is a finance specialist who writes regularly for popular websites. You can read more about Credit card offers and the 0 percent credit card here.
posted by Credit Counseling at
3:56 AM
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