Understand 0% Balance Transfers

Many of the credit card companies on the market today are offering new customers 0 percent balance transfer deals. Obviously this is a good way for the companies to generate new business, but can also be extremely beneficial to consumers who wish to save money.

Save money with balance transfers

It simply means that an existing balance, on a competitor’s card, can be transferred onto the new card. The new card will then offer a 0 percent interest rate on the balance for a specified period of time. The offer period varies from card to card, but traditionally this period has been around 6 months. However, there are now companies offering longer periods sometimes as high as 15 months.

Balance transfers are where a customer transfers an existing balance to another card. This balance is commonly from another credit card but could also be from a bank account. In order to attract new customers credit card companies are now offering fairly substantial periods of time where balances can be moved to the new card and become interest free. The length of time of the interest free period varies from company to company but is usually around 6 months, with some companies offering 9 months or more. There are even one or two offering 0 percent balance transfer deals for the life of the card.

Balance Transfer ‘Hopping’

Due to the number of cards offering 0 percent balance transfer deals there have become a number of financially savvy consumers ‘leapfrogging’ from one card to another. These people have become serial balance transferers and are now more colloquially known as ‘card tarts’. When the 0% period is drawing to a close they will immediately start looking around for a similar offer, from one of their current card’s competitors. This can be a great way of making sure that you pay as little as possible in the way of interest. Unfortunately credit card companies are growing wise to this kind of behaviour, and are now applying charges to those who make balance transfers. These fees vary from card to card, but the standard rate is around 3% of the total balance that you intend to transfer. Even with this fee it maybe something worth considering if you are unable to pay off your balance in full within the offer period.

So how do you go about applying? The first thing that someone looking for a new card should do is visit one of the comparison sites on the web. These sites are designed specifically for people looking for a new card. Here you will find a list of all of the market leaders, as well as every other type of card imaginable. Almost all of the cards will offer 0 percent balance transfer deals of one kind or another. You will be able to trawl through all of the cards available and choose the one best matching your personal requirements. Of course what is good for one person may not necessarily be good for another, so it is worth examining the whole package being offered before making a decision.

There are also some credit cards offering 0 percent for the life of the card. These are quite new at the moment but will certainly become more prolific in future and certainly worth considering provided you read the terms and conditions that you will need to fulfil in order to keep receiving 0 percent. It is most likely that you will need to spend a certain amount of money on the card every month for the length of time that you have the card. If you don’t spend the required amount then you will lose the interest free status.

One final thing to remember is that these offers are only available to new customers. Often a number of cards belong to one banking group even though they appear to be different. You will need to be sure that the card that you are applying for is in no way connected to your current card. If it is being offered by a member of the same group then it is unlikely that you will be entitled to a balance transfer offer. As ever, the more research you undertake the more likely you are to find the credit card the suits your needs; for example, the rewards you might generate with a credit card affiliated with a major retailer just for doing your normal weekly shopping might outweigh the rewards offered by a balance transfer scheme – it pays to shop around.

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