Play the credit card game to boost your wealth

The worst storms to hit the UK in 17 years have blown in and the most depressing day of the year is now behind us. January 22nd is reckoned to be the grimmest day of the year because that’s when the credit card bills from Christmas and the January sales hit home.

Chances are you will now be literally counting the cost of your festive spending and contemplating the grim weather as well as you battle to work.

Many of us are looking for a solution to start to pay off debts racked up over Christmas, or will be hoping to shift your credit card balance to reduce your minimum repayments.

It’s time to play the card game to boost your wealth and get your finances under control for 2007.

Cards offering zero percent balance transfers can be particularly appealing for those wishing to move debts. A MoneyExpert.com survey found 149 zero percent cards on the market at the moment, so there’s plenty of choice.

Do your homework

If you’re thinking about taking up a zero percent deal, be sure to check out what’s on the market. Zero percent offers are great but once the introductory period runs out you could be hit with high rates of interest, typically around 16.3%.

If you’re not keen on repaying your debt in the offer period, you’ll be stung as soon as the deal runs out – and the chances are you’ll be hit with a nasty surprise when your minimum repayments rocket.

Being a rate "tart" can also be difficult to sustain. MoneyExpert.com research found that just one in eight credit cards cap the fees they charge customers for transferring a balance.

Essentially this means instead of being charged a fixed penalty of £50 for example, card companies can charge you a percentage of your balance. Maximum fees now go as high as three percent. For people with heavy debts an uncapped £10,000 transfer could sting you for as much as £300.

Alternatives to chopping and changing

Credit cards which offer ‘life of balance transfers’ provide customers with a single, low interest rate until the balance is clear. This rate is far lower than other cards’ standard variable rate and offers range from 3.9 per cent to 5.94 per cent on balance transfers.

Companies such as M&S Money’s &More Card, Citibank, Sainsbury’s Bank and Intelligent Finance offer the lifetime deals.

Nobody wants to be permanently in debt. With a life of balance card you’re forced to address your debt instead of simply going deeper and deeper into it.

If you’re committed to a repayment schedule a fixed rate it makes it less tempting to start accumulating further debts on other cards.

Think long term

If you are thinking about applying for a new card or switching cards its important to consider what you want out of the service. Whatever you decide on be sure to check out your options for the best offers around. A small difference on repayments can make a large difference to your debts in the long term.

Always remember that credit cards aren’t free money. The debt will have to be paid off eventually. The best way to pay it off is with a plan in mind and a clear understanding of the terms you have subscribed to. If you think your debt is getting out of control, stop and think! Remember, you should only borrow what you can

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