Winning in the transfer market

Transferring your credit card balance should be top of the list of your financial priorities if you’re coming to the end of an interest free deal. Many of us are feeling the financial strain of big mortgage repayments and a rising cost of living so ensuring that you pay as little as possible for your card borrowing makes sense.

Nothing to pay till June 2009

If you get clever with your card choice you could be able to avoid paying interest on your credit card balance until June 2009 and it need not cost an arm and a leg to get one of these deals. Virgin Money’s credit card the market leader in terms of balance transfers charges a 2.98% fee to transfer your existing debt. This means that if you were to move a balance of £3,000 on to this card you would pay just £89.40 for the service.

Barclaycard and Egg offer deals which are almost as competitive – both of these offer 14 months interest free on existing balances while the Egg card comes with the added bonus of 45 day interest free period on purchases.

Play your cards right

Forgetting to move your money could cost you big. With most credit card APRs starting from around 15% you could find yourself repaying as much as £450 a year just in interest on a £3,000 debt.

Once your card starts to get expensive like this the temptation is to miss a payment, but this is a seriously bad idea. This hasn’t stopped many of us – according to MoneyExpert data over five million of us have missed a bill in the past six months.

If you miss a payment, credit rating agencies, those people who decide whether you’re a trustworthy borrower, will notice.

Missing a payment will have an adverse effect on your credit score, and with lenders getting very choosy about who they lend to, missing a couple of payments could have a big impact on the competitiveness of the deals you are offered on other financial products such as a mortgage. An additional blow is that you will be charged £12 in fees for missing the payment.

On the market

Remember that many of the cards out there offer additional incentives beyond balance transfer periods. You could for example take advantage of one of a growing number of competitive cash back deals.

The Citibank Shell MasterCard for example offers 3% cash back on all Shell fuel purchases and 1% on all other purchases. In addition it comes with 9 month balance transfer period which makes it a good all round card.

No longer capped

If you’ve got a big balance to transfer then be sure to check out whether there’s a cap on the balance transfer fee. A year ago you would have been able to choose between 18 cards but now there are just 7 cards which limit the maximum amount you can pay on a balance transfer. The Virgin Atlantic Black and White Cards both limit the fee to a maximum of £50.

Get it sorted

Sorting out a new credit card may feel like a chore but the savings you’ll make by avoiding paying interest on your existing balance could run into hundreds of pounds and take a significant amount off your monthly outgoings. There are a number of great deals available, but be sure to check whether the transfer fee is capped, this way you’ll know whether your going to incur a big initial charge or not. Be sure to make your monthly repayments whatever happens and you’ll find yourself on the road to a happy card.

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