0% balance transfer credit cards don't last long
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| 0% balance transfer credit cards don't last long |
Have you ever been attracted to a credit card because it promises you an exceptional interest rate that sounds too good to be true? Most of us have chosen one of these attractive offers. There is a growing number of credit card providers offering 0% deals on credit transfers or purchases, and sometimes they seem too good to resist.
Especially if you have a large outstanding credit card balance for which you are currently paying high interest, these offers are very tempting. In fact, with many 0% credit transfer offers, you save hundreds of pounds of interest that you would otherwise have had to pay on your credit card balance. No matter how attractive these offers may seem at the moment, you should only take out another credit card if you have taken the time to review your finances and are convinced that this is the right financial decision for you. Moment.
Suppose you have a thousand pounds in circulation on a credit card that calculates an annual percentage of 10%. This means that this balance costs £ 100 interest over a year. Suppose you find a credit card that will give you 0% credit transfers for six months. Well, it's pretty obvious that 0% is better than 10. If you accept this offer and assume that there are no net transfer fees, how much will you save during the six month interest-free period? The answer is 50 pounds. But how high will the interest rate be after the end of the interest-free period? You should think about this before choosing a credit card and not when the interest-free period expires and everything is more urgent. For our example, suppose that the interest rate is reversed at a 25% interest rate. This means that you will pay interest of £ 125 over the next six months.
Although this is a very simple example, it shows an important point in terms of 0% balance transfers. In the example above, if the customer had kept his 10% card, he would have paid € 100 interest over a period of 12 months. During the same period, he opted for a 0% balance transfer for six months, which then fell to 25%, and finally paid £ 125.
The point to remember is that just because you get a 0% credit card is not the best deal. Take a look at the long-term rates that the card offers and compare them to the rates you already get with your credit card. If your current tariff is better than the tariff you get on the new card after the introductory offer expires, you may want to stick to the card you have.
While this is happening, you won't be spending on the new credit card, but you will know for sure that you will save the interest payments on the old debt.