Money down the pan

As far as indulgent Hollywood purchases go Leonardo DiCaprio’s latest may not be the most glamorous but it certainly is extravagant.

The Titanic star has splashed out £1,600 on a remote controlled loo that not only performs any necessary cleaning functions leaving Leo hands free, but remotely senses the star’s imminent arrival and lifts the lid invitingly.

Such lavatorial luxury is sadly beyond the grasp of most of us – especially in the post-Christmas belt-tightening period.

But it seems millions of us are finding other ways to flush pounds down the drain, sticking with credit cards charging huge rates of interest when literally hundreds of better deals are available.

MoneyExpert.com gives the low-down on how best to deal with Christmas credit card debt.

Shift it

With demands on our finances high in the run-up to Christmas many of us turned to credit cards to fund the festive season, but now it’s payback time and in some cases lenders will be making some pretty heavy demands.

Some credit card deals, unbelievably, have borrowers tied down to rates of 39.9 per cent meaning that on a debt of £2,000 borrowers will be paying £798 interest over the year.

However, there’s no reason why debts on one card cannot be transferred to another offering a much better rate of interest – ideally none at all. Analysis of the market shows that 72.5 per cent of all standard credit cards now offer zero percent deals on balance transfers, so there’s no shortage of potential targets.

Currently the longest zero per cent balance transfer offer is 15 months with Halifax, with the average deal lasting for around 10 months, while the longest zero per cent on purchases is from Virgin Money, also offering 15 months.

Check the small print

Unfortunately, the much maligned credit crunch has inevitably taken its toll on the credit card industry and lenders are being somewhat more cautious.

For those of us looking to transfer a balance the near certainty is that we’re likely to be charged a fee. Some fees can be as high as three per cent, making a considerable sum if the balance is large. Someone transferring £2,000 at this rate would pay £60 for the privilege.

Almost all of the major providers offering 0% on balance transfers for a given period will charge a fee, generally varying between 2.5% and 3%. If you have a considerable debt but think you can clear it by November 2008 the Platinum Master card from Capital One is a good bet with a fee of only 1.7%.

What to do

However, despite the fees, for the majority of those with heavy credit card debts to clear switching to a 0% deal is by far the best option. As long as you check when the deal expires you should be able to construct a payment plan that will allow you to clear your debts at the lowest possible cost.

It’s crunch time

However the credit crunch means that many of us are getting turned down for credit cards even when we’re applying to transfer a balance.
If that’s the case for you don’t despair. It is still possible to consolidate your debts with a personal loan. Rates there are not as low – there are no zero per cent deals – but you can still get a loan for less than the average 16.9 per cent charged on credit cards.

Compare Balance Transfer Cards

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