We’re all trying to save money at the moment one way or another, whether it’s through cutting our discretionary spending or switching our utilities to cheaper providers.
However, have you considered the range of ways that a credit card can help you better manage your money?
Carrying out balance transfers is just one way that you can reduce your outgoings each month. Why pay more on what you owe than you have to? Specifically, you’ll be looking for a generous 0% balance transfer offer – the longer the period, the more time you’ve got to get your finances in order.
However, there area number of things to watch out for when it comes to balance transfers – when used well, they can prove a financial masterstroke, but there are pitfalls and things to consider.
The introductory period
This is the most important thing to compare – it’s usually anything between three and 18 months. Of course, if it’s a low number of months, it may not be worth paying the fees to transfer a balance. For this reason, you should be looking for at least nine to 12 months, giving you breathing space to get your finances in order and work out ways you can reduce what you owe.
Balance transfer fee
As mentioned above, this could be applicable when you transfer a balance, so factor this into your decision. If an introductory 0% period is fairly short but you end up paying a high fee, the financial benefits could be effectively wiped out. Take your time to work out how much you’ll save over the period and whether it’s worth paying the fee.
What’s the interest rate after the introductory period?
Pay close attention to this, as it’s what you’ll be paying once your deal ends. Of course, you could decide to hop to another 0% balance transfer deal, but you should be wary of doing this too many times – after all, the point is to use the 0% offer to get your finances in order and reduce what you owe. Moving cards too quickly can also negatively affect your credit score, not something you’ll want to be doing when you’re working out ways to reduce what you owe.
Focus on your goals
It can be easy to be attracted to reward cards which offer free stuff, but if it’s a balance transfer credit card you’re after, make a lengthy 0% deal your ultimate priority. If you can find a decent balance transfer credit card with a nice reward, all the better.