Money Transfers

A balance transfer can be explained simply as a balance transfer when a balance is transferred usually from a credit card, but possible from a bank account or loan to a credit card with a offer interest rate a set period. It does not have to be the entire amount. The card receiving the balance will an interest rate for a set term, normally 6 months, but can be 9 months or even a year. Take a look at the current balance transfer deals currently available at This will give you a flavor of the typical kind of deal available.

It is important to remember that a balance transfer does not mean that the debt has gone away. It just means you are not paying interest on it. You will still have to maintain payments. This may seem obvious but many people do not get this straight in their mind. The basic criteria for getting a balance transfer are when you regularly have an outstanding balance after making your monthly payments. This is the amount you should look to transfer to another card. This will mean that for the period of the offer you will pay no interest on the balance provided you make the minimum payments. You should be very wary of taking up a balance transfer, if your overall debt is increasing. A balance transfer is not a green light to spend more money. The money you save should be used to decrease your debt.






You need to be aware of the following when looking for a balance transfer card, Good things. Length of offer period. Offer Interest Rate. The zero or low interest rate charged on the balance. Possible transfers from loans and overdrafts. On some cards you can transfer from existing loans and overdrafts and still get the offer. Bad things. Cut-off period for the balance transfer offer. Hidden Charges on transfers. Some banks will charge a handling fee on the balance transfer. There is usually a cut off point from the account opening when the offer is no longer valid. Be very aware of this otherwise you could end up transferring a balance to a higher rate!!

Unless there is also a 0% interest rate on new purchases then you should avoid making new purchases on a balance transfer card. This is because the banks will look to reduce the balance transfer debt quicker than the new debt. Provided your credit history is reasonable, there is nothing stopping you having several cards for different purposes. A good way is to have a card, which specializes in 0% on new purchases.

When the balance transfer offer period finishes the debt will revert to the typical variable APR. The lenders hope at this point that the cardholder will retain the card and some of the debt, so they can then start charging interest and making some money! So take into consideration the low interest rate credit cards. However, there is nothing stopping the disciplined credit card holder from switching to another balance transfer deal and closing the account. The cycle then starts again. Always allow 6 weeks to 8 weeks before the end of the offer period to apply for a new card.

This means you can get the balance transferred to the new card before the lender can start charging the higher rate. You have to be organized to do this, but if you are it does work. People who regularly switch balances are know as card tarts.The Golden Rules, There are three things to look out for with a balance transfer card. As mentioned previously, the unsuspecting can get caught out when spending on a balance transfer card. Maintaining regular payments. If you miss a payment you incur some penalty, so be aware. To be safe set up a direct debit. The interest rate applied when the offer period finishes. Good luck with your choice.

Despite the credit crunch that we have heard so much about in recent months, low rates of interest can still be available to the UK consumer. Many credit card providers seek to attract new customers with introductory offers of low rates of interest These rates can even be zero. For a small percentage fee you could transfer your debts from a credit card with a high rate to a new account with perhaps a zero rate which can be held in some case for up to fifteen months. As a short term solution it can be a way of helping ease the pressure of debts and allow a window of opportunity to obtain funds to pay off the debts perhaps by selling assets, obtaining new employment or downsizing your property.

Key things to watch out for if you are considering a balance transfer, New card spending Don’t be tempted to spend on the new card – Any new amounts you put on to the account won’t benefit from the introductory offer and typically will be the last amounts to be paid off. One simple tip would be to leave the card at home when you go out to reduce the temptation to spend on it. That said read the small print as some have a ‘no-spending’ clause which would result in the removal of the introductory rate if you don’t spend a certain amount within a certain time period. Old card spending. Don’t be tempted to spend on the old card either – You run the risk of racking up the same level of debts again. Once you have transferred the debt, cut up the card and close the account.

Normal Interest Rate- Remember though that once the introductory period expires then the interest rate will revert to the card’s normal rate. Care should be taken to ensure that if you are not going to pay off the debts in full then the normal rate would still be better than your original provider. Alternatively you could of course consider jumping again to another introductory offer. Interest free term. Some credit card providers are offering for an interest free term of a year or more but tend to make up for this by charging a transfer fee.

Transfer fee-Card providers may bemoan customer disloyalty displayed by certain people who become “Rate Tarts” but they all offer the same type of deals and benefit from the transfer fees which can be up to 3%. There are providers who offer no-fee transfers so it does pay to shop around but remember it is only the interest that is frozen and that you will still have to make monthly payments in accordance with the terms and conditions. Paying off the debt. It is important to pay off as much as you can as you go along so that you become debt free as soon as possible. If you just make the minimum monthly repayments it will take too long to clear the debt in full and you run the risk of incurring costs when the introductory period runs out.
Annual fees. Some cards have annual fees which may be added to your balance and depending on payment hierarchy you could be charged interest on the fee.

Other perks-If you are looking to transfer a balance as a way of improving your finances don’t be swayed by other perks offered by the credit card providers such as cash-back bonuses, air miles, insurance or how cool/cute the card looks. Stay focused on what is important and that is the cost. Impact on credit rating-Credit agencies will monitor how many cards you have and what is outstanding on your cards so it can impact your credit rating. You could also be refused more credit it you have too much outstanding or given a lower credit rating. If you are concerned about your rating you should find out how much credit a new provider will give you. It is very important to close your old credit card account.

Debt merry-go-round-Theoretically you can transfer balances from card to card to card for many years, particularly if you always make your payments on time and your credit rating is high enough. What should be avoided is getting on to a balance transfer merry-go-round where you transfer the same balance repeatedly without ever paying it off in full. The result of this is that you incur transfer fees time and again. Worse still you also run the risk that you slip off on the debt merry-go-round, where you transfer a balance, don’t close your old account, incur further debt and though you may have saved on some interest rate costs, your debt problem has doubled. As mentioned before balance transfers can be a useful tool in addressing your debt problems but they are only a short term measure. If you have debt worries, you may benefit from speaking to a professional on a free and confidential basis.