Balance Transfers

A very popular way of managing credit debts is to continually transfer a total balance from one credit card to another to get the benefit of incentive low and 0%APR Interest free rates (0% Balance transfers) from various companies.
It is quite possible to maintain a rate of 0%APR or very low APR rate for a considerable period time. This is done by applying for a new credit card that is offering a 0% APR rate as introductory offer on its balance transfers before your current offer on your current credit card has expired. Then as soon as the term of the original low rate deal is coming to an end you make a transfer of that balance to your new card. Moving a balance transfer from one card to another is usually very easy. No more than calling the hotline phone number on the back of your new credit card. However this is becoming a very common practice and customers who regularly do this are being labelled as “CREDIT TARTS”. These days it’s become more common for companies to make a charge for your balance transfer, this may be a fixed fee, small interest charge or a combination of both, read the small print. Never forget that credit card companies are in the business of making money and if you never stay with one company then they are not going to see you as potential business.
Be aware that information between credit card companies can be accessible and shared by them all. There will be a limit to the number of times you can transfer balances before you find yourself being refused a card altogether. Remember when making a credit card balance transfer that bringing a balance down to zero does not close that account. You need to contact the credit card company about closing it, normally you would be required to cut up the credit card and post it back. While you may be paying 0% percent interest on your credit card balance transfer you will still have to pay the minimum monthly amount.
Balance Transfers should not be seen as a way of avoiding paying off a balance. No matter how many times you transfer that amount, it will still require paying off at some point. Technically economists will argue that a fixed amount carried over for years will in effect become a smaller amount in real terms because of the effect of inflation. The trouble is you still have to pay a minimum amount each month and if you use you credit card for other purchases these repayments will go towards paying off the balance before paying for purchases will be attracting a higher rate.

WHAT YOU MUST BE AWARE OF:
As consumers have become more market aware they have started to switch from deal to deal (credit tarts) and thus maintain a 0% rate over a considerable length of time on a given balance. This has squeezed the margins of the brands themselves. In order to  maintain profitability and as a disincentive to consumers to keep switching cards they have introduced fee's on their transfers. Currently these range from 2-3 percent. On a £5,000 transfer for example the difference can be £50. The other point to watch for is whether the maximum amount you will pay as a fee is capped. A 3% charge on £5,000 is £150, so if you can a find a capped deal at say £50 that's a potential saving of £100. So make sure before going for any deal you compare the charges you will encounter.

Be aware that the terms for many of these introductory offers means that if you miss even a single monthly repayment the offer reverts to the normal standard rate, and no longer 0%.

Remember too though that your repayments will go towards that balance transfer before being applied to new purchases, so choose this option only if you don't intend to use your credit card heavily while you still have the balance transfer outstanding.

STANDARD RATE TIPS:
Never think that the long term standard rate you receive on your chosen credit card is the rate you are stuck with. Once you have had your credit card for some time you can always correspond with the company running that card in attempt to lower the standard rate. If the brand can see you are a valuable customer, i.e you use your card on a regular basis and have a good repayment history, then very often they will be happy to offer you a lower standard typical rate to keep you as a customer.