Flirt around – or go steady

Millions of people fail to pay off their credit card debts each month. Many will still be paying debts left over from Christmas and with Easter just around the corner, the debts are set to grow.

If you are among those who carry debts from month to month, you need to think about the best way to pay them off.

But are you a rate tart? Or would you rather avoid the hassles of switching credit cards over six months to a year?

Clearly, the lower the interest rate, the more will be left over to reduce the actual debt. But should you keep switching your debt around cards to enjoy the introductory rates, or should you go for a longer term plan using one card? can explain the issues.

The zero option

Credit is a competitive market. Lots of card companies offer low-rate and even zero introductory rates to get you on their books.

If you are comfortable switching cards regularly and can keep on top of the administration, then the zero rate option could be for you.

But beware of the switching fees imposed by your new card provider. A low or zero interest rate means you have more cash available to reduce your debt, but the switching fees need to be factored into the costs.

You must also beware the high interest rate that kicks in at the end of the introductory term.

The table below from shows some of the best deals available:

Provider Product Details Introductory Balance transfer Fee Introductory Period Typical APR (variable)
Barclaycard Barclaycard Platinum 2.90% 1st July 2008 14.90%
Virgin Money Virgin Credit Card 2.98% 13 months 15.90%
Halifax One Card MasterCard 3.00% 12 months 15.90%
MBNA Europe Platinum Plus Visa 3.00% 12 months 15.90%

Source:, 8th May 2007

The steady option

If you would rather have a stable relationship with your credit card provider, then moving to a life of balance card could be for you.

A life of balance card guarantees a low rate of interest on balance transfers until the debt is paid off. It means you won’t be hit with a high rate in the future, so with a little planning you can sort out a realistic way to get back in the black.

While you will avoid the switching fees associated with being a rate tart, you are still likely to pay a balance transfer fee. The fee may be a percentage of the amount being transferred and therefore uncapped by the card provider, so make sure you know exactly what you will be paying to transfer your balance.

The table below from shows some of the best life of balance deals:

Provider Product Details Introductory Balance Transfer Rate Balance Transfer Fee
Morgan Stanley Platinum Card 3.90% 1.00%
Citibank Platinum Mastercard 4.90% 2.50%
Barclaycard Barclaycard Platinum ( exclusive) 5.90% 2.50%
Sainsburys Bank Platinum Mastercard 5.94% 0.00%
Sainsburys Bank Standard Mastercard 5.94% 0.00%

Source:, 30 March 2007

Do a clever switch and increase your wealth

Interest rates are rising. It is becoming even more imperative for you to find a competitive rate on your credit card debt, otherwise you will pay a price for negligence.

What choice you make depends on how willing you are to keep switching. If you have a lot of debt then the switching fee can be high each time if it is a percentage of the debt, but at least the interest rate will be lower.

A long-term low rate can make much more sense than switching cards all the time the smaller the debt and the less willing you are to be a rate tart.

It is becoming harder to keep switching, too. Credit card providers are getting tough over bad debt and are turning down applications for new cards. A poll commissioned by revealed that as many as 2.8 million attempts to obtain a credit card had been rejected over the six months to March 2007. Those aged between 25 and 35 were the most likely to be rejected.

Pay down your debt

Consolidating all your debts on one low or zero-rate credit card is a practical solution to keeping track of them and minimising the interest rate. But whether you use a life of balance or a zero introductory rate credit card, make sure you have a clear plan to pay the debt off as soon as possible – any interest you pay is always dead money. For more information, click through on the Credit Card button on

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