IT'S more than likely that many people's New Year's resolution was to cut down their credit card debt. Well, fortunately, it might just be easier than you thought.
A few years ago, at the height of the financial crisis, banks began to rein in their loans. You could only get a good deal on a balance transfer if you had little to move over and even then it was heavily dependent on your credit rating.
Now though, interest free credit cards are everywhere and if you are facing a hefty credit card bill racked with interest, it is the best time to wipe the slate clean.
Leading bank Santander reported that 2.8 million people will transfer their credit card debt this year as companies start to offer increasingly attractive deals. Some outfits are offering 0% interest on balance transfers for up to 16 months, giving you time to plan for the future and manage your outgoings.
Unfortunately, if you have substantial debts across a number of different cards or have missed minimum payments in the past, you may struggle to pass the necessary credit checks to secure the top notch deals. However, it is possible to check online which card companies are more likely to accept your application without ever needing to go through the process of applying.
Furthermore, even with a bad credit history, it can still be possible to secure a low-rate deal that will reduce your current interest rate, so it's still worth shopping around.
It is advisable to set up a direct debit from your bank account as soon as the balance transfer is complete. Ensure the minimum amount is paid each month to avoid any unnecessary penalties, but try to ensure regular payments are kept up to avoid reaching the end of the 0% period with insufficient repayments.
Furthermore, should you be able to finance a payment of your total outstanding balance within the interest-free timeframe, divide the amount you owe by the number of months and use that figure to set up the direct debit.
Should you reach the end of the interest-free period without paying off all your debt, it might be advisable to move your debt once more. It may, though, be risky to rely on this notion as unforeseeable circumstances may affect your ability to find another interest-free deal in the future.
Those shopping for a credit card must also ensure they read the small print. Some companies may appear wonderful on the surface, but hidden fees and outrageous interest rates can cause even the wealthiest individuals to struggle.
Some credit card companies will charge you for not using the card and others may expect an annual fee for the service. Furthermore, popular cashback services for those who pay on time are quickly taken away and replaced with a hefty interest rate should a customer miss a single payment.
That said, the newest offers on interest-free credit cards are certainly more effective than the payday loan services that have become popularised throughout the recession. Some of these companies can charge up to 4,000% interest to those who need the money most. Failure to repay can lead to County Court Judgements or even repossession.
Having an interest-free credit card can give you a breather from your debts and help manage your money more economically. Spreading your debts over a number of months can ease the burden of high interest rates and relieve the worry of an inflated bill next month.
Before you commit to anything, make sure you check out price comparison websites to find the best deals; but remember, what appears to be the best deal may not be for you.
Look at interest on purchases as well as balance transfers; should you need money for an emergency, you won't want to be paying a staggering interest rate added to your current debt.
Some price comparison websites have a 'smart search' facility, allowing you to fill in some details about yourself and your debt. It should filter out deals that are unsuitable for you or any of which you are likely to fail a credit check.
Price comparison websites don't always show every deal available on the market; however, they should give you a fairly clear picture of what you might expect.
So, if you have debt and are looking at your options, have a look around and see what's best for you.
