Your Step-by-Step Guide to Balance Transfers
Credit card monogamy is dull – and expensive. Being a rate tart takes time and planning, but if you get it right you can wave goodbye to credit card interest charges forever.
1. Shop around
With so many credit card providers offering lengthy interest-free periods on balance transfers these days, it pays to shop around – literally. The right card that offers a good deal can make a huge difference to your finances, so make use of impartial credit card comparison tables to find the truly great deals. Visit the TotallyMoney credit card comparison table here.
2. Check the transfer fees
When comparing credit cards that offer an interest-free period on balance transfers, many people look at the length of the interest-free period as the main point of comparison. However, equally important are the transfer charges or handling fees. Most credit card companies charge either a set fee or a percentage of the balance for transferring your balance. The most important thing is to do your sums and ensure that the interest-free period is lengthy enough to make the transfer financially worthwhile.
3. Avoid unnecessary benefits
It may seem like a strange idea to avoid benefits, but when it comes to balance transfers this is really true. There’s no point in signing up for a card that offers a shorter interest-free period because it offers the benefits of cashback on new purchases or a lower standard variable rate at the end of the period, as you won’t be using this credit card for anything other than the balance transfer – everything else is superfluous, and will only detract from the one benefit you really need.
4. Make the balance transfer ASAP
Each credit card provider will have its own conditions for balance transfers; usually, the interest-free period will begin either as soon as the balance is transferred, or as soon as the account is opened. If it’s the former, be sure to make your transfer as soon as possible so that you can gain maximum benefit.
5. Focus on your debts
Now that you’ve successfully transferred your balance, don’t lose focus on what you’re doing. This is your window of opportunity! Now is the time to repay as much as you can afford each month to significantly reduce the capital amount without having to worry about paying interest as well. Whatever you do, don’t pay only the minimum monthly repayment, as these amounts are designed to be so low that you will remain in debt for as long as possible.
6. Don’t spend on your card!
Making new purchases with a balance transfer card is a big no-no! Even if your card offers an interest-free period on new purchases, you should always avoid using one card for more than one purpose, as you will more than likely end up paying more interest on your purchases than you think you will. Have a different card for each purpose instead.
7. Planning makes perfect
Make a note in your diary to remind yourself that the end of your interest-free period is coming to an end. About 6 weeks before this, start looking out for a new card with a new provider. Banks rely on lazy consumers letting their interest-free period pass by without having transferred their balance elsewhere, thereby making a tidy profit in high interest charges. Don’t be one of them! Start looking for a new deal early, and remember that the application process can take time, as can organising the balance transfer, so that when your deal expires you and your balance will be sitting pretty elsewhere.
8. Start all over again
Congratulations – you’ve done it! You are now a bona-fide rate tart. But don’t get too comfortable, now the whole process begins all over again. It takes dedication to keep up, but in the long run is an excellent financial practice if you want to avoid ever paying interest charges again.
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