What to look for with 0% balance transfer cards : Credit Card Guide

What to look for with 0% balance transfer cards

For many credit card users in the UK, 0% balance transfer credit cards have become an effective way to save money on interest and enjoy more affordable credit card spending. The purpose of the 0% balance transfer card is to enable cardholders with high interest credit cards to transfer the balances from their higher interest credit cards onto the 0% balance transfer card, and then enjoy a period of interest free credit within which to repay the balance without being charged any interest.

Using 0% balance transfers is simple and convenient, as you can get the new credit card provider to transfer your old credit card balances for you, so you will not have to go to any trouble. If you are paying a high level of interest on your current credit card debts then transferring to a 0% balance transfer card could make a big difference to the amount that you end up paying on your total debts. However, although there are many benefits when it comes to a 0% balance transfer card there are also things that you need to look out for.

One of the things that you need to keep your eye on with a 0% balance transfer credit card is the transfer fee that is charged by the credit card provider. Most credit card providers will charge a transfer fee of between 2-3% of the total amount that you are transferring onto the card, and this means that the more you are transferring the more you will pay. Some cards have a minimum and maximum transfer fee limit, and you should check to see what these are.

The transfer fee charged can vary from one credit card to another so it is important that you compare a number of 0% credit cards in order to find a transfer card that charges a fee that is not too high, otherwise you may find that you are paying a fortune in order to transfer your balance. However, you need to also take into consideration how long an interest free period is on offer from the credit card provider, so you need to balance both factors in order to get the card that best suits your needs and your pocket.

Another thing that you need to look out for with these credit cards it the tempting offers that credit card providers may through at you also offering a number of months' interest free credit on purchases. However, do not get fooled by this debt trap, as the purchase interest free period is usually far shorter than the interest free period on the transferred balance, and this means that your purchase balance will get trapped behind the transferred balance where it will start to accrue interest once the 0% period on purchases is over.

In the meantime any repayment that you make will be applied to the interest free transferred balance, which will leave your purchase balance trapped for even longer, where it will accrue even more by way of interest.

Tom Smith
10th March 2008

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