A New Year has brought no promise of respite from the current financial crisis and the credit crunch appears to be still in full swing. With the financial forecast still pretty gloomy as we head into 2009, its chilly winds are affecting not just big business, but ordinary consumers as well. However, a new year opens up a new opportunity to take control of your finances and despite the doom-laden headlines there are still plenty of financial bargains to be had if you know where to look.
Although the number of enticing 0% offers has fallen because of the economic climate, there are still plenty of bargains to be had with some financial institutions even joining in the high street scramble for customers and offering 'Sale Prices' on their services. So the wise consumer can take advantage of an anxious market thats eager to please. There are still 0% offers out there, but the credit crunch has meant that they are harder to come by. Many credit card companies are only accepting people with good credit histories. So before you plan your 2009 finances, it is worthwhile checking that your credit record is up to date and that all the information held by the credit agencies is correct. If you have a poor credit history and are repeatedly turned down for credit cards this will compound your low rating and make it much harder to reapply for credit at a later date. Make sure your financial house is in order before you begin to think about changing cards.
There are a few things to take into consideration when looking at balance transfer cards. Firstly, be aware that you will be required to pay a transfer fee to move an outstanding debt from one card to another. This is normally around 3% of the total transfer, but some credit card companies have a minimum fee, regardless of the amount transferred. You need to include this figure in your initial calculations.
Not all 0% balance transfer credit cards offer interest free terms on purchases as well. This is where the golden rule of credit card balance transfers comes into force " never use the card for purchases as well. Keep it exclusively for balance transfers. The amount you pay each month will go to pay off the most recent transactions first, rather than your initial balance transfer. This means that you could end up running out of time on the 0% offer, with your monthly payments going to clear off recent purchases when they could be shrinking the size of your balance transfer instead. This could undermine the whole point of taking out a balance transfer card in the first place, as you may start paying interest before the debt is cleared.
Some cards offer a tempting combination of 0% on balance transfers and 0% (usually for a much shorter period of time) on purchases. In a direct reversal of the above scenario, with these cards once the 0% on purchases has run its course your payments go to the amount attracting the lowest interest rate first, namely your balance transfer. This is known as 'negative payment hierarchy' and results in the customer paying the full interest amount on purchases (usually a minimum of 18% on most cards) and costing more in the long run. To reiterate; the best advice is to have two cards " one exclusively for your balance transfer and one for your purchases.
If you are planning to transfer your balance onto a low or zero interest rate card, work out exactly how much you will be have to be paying each month to clear the balance before the interest kicks in. Factor into this any late payment charges that may be incurred, transfer fees and other fees such as insurance (which should be optional). By knowing your figures before you submit your application, you are taking charge of your finances from the outset, putting you in a much better position to weather the financial storm that is currently battering the economy. Even in the depths of a financial winter, smart consumers can still find monetary havens and credit card deals. - 14915
Although the number of enticing 0% offers has fallen because of the economic climate, there are still plenty of bargains to be had with some financial institutions even joining in the high street scramble for customers and offering 'Sale Prices' on their services. So the wise consumer can take advantage of an anxious market thats eager to please. There are still 0% offers out there, but the credit crunch has meant that they are harder to come by. Many credit card companies are only accepting people with good credit histories. So before you plan your 2009 finances, it is worthwhile checking that your credit record is up to date and that all the information held by the credit agencies is correct. If you have a poor credit history and are repeatedly turned down for credit cards this will compound your low rating and make it much harder to reapply for credit at a later date. Make sure your financial house is in order before you begin to think about changing cards.
There are a few things to take into consideration when looking at balance transfer cards. Firstly, be aware that you will be required to pay a transfer fee to move an outstanding debt from one card to another. This is normally around 3% of the total transfer, but some credit card companies have a minimum fee, regardless of the amount transferred. You need to include this figure in your initial calculations.
Not all 0% balance transfer credit cards offer interest free terms on purchases as well. This is where the golden rule of credit card balance transfers comes into force " never use the card for purchases as well. Keep it exclusively for balance transfers. The amount you pay each month will go to pay off the most recent transactions first, rather than your initial balance transfer. This means that you could end up running out of time on the 0% offer, with your monthly payments going to clear off recent purchases when they could be shrinking the size of your balance transfer instead. This could undermine the whole point of taking out a balance transfer card in the first place, as you may start paying interest before the debt is cleared.
Some cards offer a tempting combination of 0% on balance transfers and 0% (usually for a much shorter period of time) on purchases. In a direct reversal of the above scenario, with these cards once the 0% on purchases has run its course your payments go to the amount attracting the lowest interest rate first, namely your balance transfer. This is known as 'negative payment hierarchy' and results in the customer paying the full interest amount on purchases (usually a minimum of 18% on most cards) and costing more in the long run. To reiterate; the best advice is to have two cards " one exclusively for your balance transfer and one for your purchases.
If you are planning to transfer your balance onto a low or zero interest rate card, work out exactly how much you will be have to be paying each month to clear the balance before the interest kicks in. Factor into this any late payment charges that may be incurred, transfer fees and other fees such as insurance (which should be optional). By knowing your figures before you submit your application, you are taking charge of your finances from the outset, putting you in a much better position to weather the financial storm that is currently battering the economy. Even in the depths of a financial winter, smart consumers can still find monetary havens and credit card deals. - 14915
About the Author:
James Noon is a financial writer who enjoys breaking down financial and credit card jargon for the consumers. He writes for various popular websites. You can find out more about credit card balance transfer here.
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