How To Use 0% Balance Transfer Credit Cards

0% balance transfer credit cards must be amongst the best known and least understood of financial products.

They’re renowned as the credit card ‘good guys’ but – used incorrectly – they can be as dangerous to your wealth as any high-interest credit card used for purchases.

This is a real shame since, in comparison with some other forms of plastic, 0% balance transfer credit cards are fairly simple.

In fact, there are only three major pitfalls to transferring a high-interest credit card balance over to a balance transfer credit card (this article won’t go into some of the other ways of using 0% balance transfer credit cards, such as stoozing).

These three pitfalls can be summarised as FOP: fees; 0% offer length and purchases.

The first pitfall is the fee that a credit cardholder is required to pay when they take out a 0% balance transfer credit card.

This fee is usually a percentage amount of around 2-3% of the transferred balance which is then added onto the balance.

The first pitfall then is to remember this fee and take it into account when working out how much you need to pay back every month to pay everything back within the 0% period.

The second pitfall is knowing how long the 0% balance transfer credit cards offer lasts for.

This will be advertised heavily when you compare credit cards but offers often change very quickly so it’s always worth checking the terms and conditions when you receive your credit card.

When a 0% interest offer ends the credit card will return to the higher interest rate, usually of around 20-30% APR.

So to avoid interest payments credit cardholders will need to either move the balance again to another 0% balance transfer credit card or pay the high-interest payments which will seriously deplete the savings they’ve can make in the long run.

Finally, there is the pitfall of purchases when you use a 0% balance transfer credit card.

This is a problem because purchases attract a much higher interest rate than the 0% balance transfer but often cannot be paid off until the balance transfer has been paid off in full.

This is particularly problematic when a 0% balance transfer credit card also has a 0% purchases rate.

Rarely, a credit card such as the Virgin money credit card will solve this problem by having a short 0% purchases offer which can be paid back before the balance transfer period.

However, these credit cards are rare and consumers are advised to check their terms and conditions carefully and – if concerned – not to spend using a 0% balance transfer credit card at all.


Julia Cook is a staff writer for the news, reviews and price comparison credit card comparison online. The website includes tools to help users compare 0% balance transfer credit cards
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