Whether you use one to shop securely or to cover unplanned outgoings outside of your monthly budget, credit cards have become an integral part of life for many people. And with so many ‘0% deals’ on the market, they can prove a cheap alternative to costly overdraft fees, bank charges and high interest rates from independent loan providers – when used correctly…
0% Purchase Credit Cards
If you are looking to make a significant purchase but fear a costly loan, then a 0% new purchase card could be for you. Providing that it is used correctly, this is the cheapest way to borrow money: it allows you to spread the cost of your purchase over a prolonged period of time without any additional charge to you.
Market deals currently offer up to 18 months interest-free credit on new purchases – better than many store cards. However, beware of getting into the habit of spending on cards like these. Failing to repay the money borrowed within the agreed time will lead to mounting debt: you will be paying off interest on long-forgotten purchases well after attractive rates have come to an end! Unless, of course, you decide to transfer your balance onto a 0% balance transfer card – let’s explore this option…
0% Balance Transfers
If you have existing credit card debt which you can’t reasonably pay off, the best option is to transfer this outstanding amount to a new credit card which offers a significantly lower interest rate: this is referred to as a balance transfer. In other words, it involves utilising another credit card to manage your debt, and it works by preventing mounting debt from high interest rates. 0% balance transfers mean you pay zero interest on the new credit card, and is the ideal solution. However, if this option is not available to you, you can still benefit by transferring your debt to a credit card which offers a lower interest rate than the initial credit card did.
Some credit card companies now offer 0% transfer deals lasting well in excess of two years. As long as you are willing – and able – to hop from card to card, you may never again need to pay interest on money you borrow. But whilst these 0% balance transfers can allow you to clear existing debt and dodge interest rates, don’t get caught out. There is generally a fee to pay on money transferred, and the length of promotional rates varies from card to card. In other words, don’t fall into the same trap as you did before: beware of high interest rates after the initial 0% rate has expired, and move on to a new card (if necessary) before the higher rates hit you.