Balance Transfers: 0%, For life, or Flat Rate?
There are now 3 main kinds of balance transfer offers available to people applying for a new credit card. Which one is right for you?
The 0% Deal
Interest-free introductory deals are the standard balance transfer offer that we've grown used to over the last few years. With these cards you can transfer a balance, either from another card, an overdraft or other debt, and pay no interest at all for a set period.
The length of the offer used to be a standard 6 months, but the lengths are getting longer and longer - up to 12 months in some cases. Once the intro period has passed, any remaining balance that you haven't cleared will have interest charged at the card's standard rate.
Pros:
- You can save £££s in interest charges by transferring a balance from a high interest card or overdraft, so long as you clear the balance (one way or another) before the introductory period ends
- In theory, you can keep switching a balance between different new cards and so avoid paying interest indefinitely
Cons:
- If you don't clear your balance before the introductory period is up, you'll pay interest at the standard rate on whatever remains
- Regularly switching cards can have a negative effect on your credit rating according to some experts
- More and more cards now charge balance transfer fees
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