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0% Balance Transfer Credit Cards

Don't play games - Follow this golden rule

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Actually there's not one Golden Rule for using a 0% Balance Transfer Credit Card, there are 2 -
  1. Never use the card again to spend
  2. Never miss a minimum payment
Golden balance transfer rule 1

Not all debt on a 0% Balance Transfer Credit Card is treated the same way. For example -

  • If you transfer £2,000 to the 0% Card that is one debt
  • If you then use the card again spending £1,000 that is a separate debt

The trouble is the £1,000 is not charged at 0% as it's not a balance transfer. Usually this will be charged interest at the standard rate, 15% or more.

But the £1,000 debt cannot be repaid until the balance transfer debt of £2,000 has been repaid and therefore the £1,000 starts to accrue interest.

This is one of the small print tricks designed to catch out the many people who balance transfer. So Golden Rule 1 states -

If you balance transfer never spend on that card again until the balance is settled in full

Golden balance transfer rule 2

The other Golden Rule is never to miss a minimum monthly payment.

Balance Transfer Cards still require a minimum payment every month, usually 2% - 3% of the overall balance. And miss this and the small print will say the 0% deal is off and interest will be charged at the standard rate

The way to combat this threat is one of the following -

  1. Set up a direct debit to pay at least the minimum balance every month, 1 -2 weeks before the payment date (to allow time to sort out any payment problems should they occur)
  2. If you don't set up a direct debit pay the bill as soon as the statement comes through the post, ie don't try to be clever and pay it a few days before the required date

See Secret 8 - 10-30 minutes a week is all you need to be financially organised - which is one of this site's 10 Secrets to Good Personal Finance.

See also

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