Notes About Business

As the coldest January for years starts to bite and the credit crunch is still in full swing, the financial forecast is pretty frosty for ordinary consumers. But a New Year can mean a new chance to take control and manage your money to your benefit, and taking advantage of credit card balance transfers could be one way to warm up your finances.

Although the number of enticing 0% offers has fallen because of the economic climate, there are still plenty of bargains to be had with some financial institutions even joining in the high street scramble for customers and offering ‘Sale Prices’ on their services. So the wise consumer can take advantage of an anxious market thats eager to please. There are still 0% offers out there, but the credit crunch has meant that they are harder to come by. Many credit card companies are only accepting people with good credit histories. So before you plan your 2009 finances, it is worthwhile checking that your credit record is up to date and that all the information held by the credit agencies is correct. If you have a poor credit history and are repeatedly turned down for credit cards this will compound your low rating and make it much harder to reapply for credit at a later date. Make sure your financial house is in order before you begin to think about changing cards.

There are a few things to remember before you apply for a credit card balance transfer offer. You will be required to pay a balance transfer fee, usually around 3% of the total amount transferred. Some cards have higher rates than others, so again it pays to search the market before deciding on your best option. Some credit cards have a minimum fee, regardless of how small the transfer. If you are only looking to transfer a small amount onto a new card, a minimum fee could make the process much more expensive than it needs to be.

Not all 0% balance transfer credit cards are interest free for purchases as well. There is a mantra that anyone thinking of transferring balances between credit cards should learn ” never use a balance transfer card for purchases as well. The amount you pay each month on your new card will go to pay off the most recent transactions (your purchases) rather than the initial balance transfer. If you treat the card as you would any other credit card, you may find that the interest free period has slipped by unnoticed and youre suddenly paying interest on the balance transfer anyway ” negating the whole point of carrying out a balance transfer in the first place.

Some cards offer a tempting combination of 0% on balance transfers and 0% (usually for a much shorter period of time) on purchases. In a direct reversal of the above scenario, with these cards once the 0% on purchases has run its course your payments go to the amount attracting the lowest interest rate first, namely your balance transfer. This is known as ‘negative payment hierarchy’ and results in the customer paying the full interest amount on purchases (usually a minimum of 18% on most cards) and costing more in the long run. To reiterate; the best advice is to have two cards ” one exclusively for your balance transfer and one for your purchases.

If you are planning to transfer your balance onto a low or zero interest rate card, work out exactly how much you will be have to be paying each month to clear the balance before the interest kicks in. Factor into this any late payment charges that may be incurred, transfer fees and other fees such as insurance (which should be optional). By knowing your figures before you submit your application, you are taking charge of your finances from the outset, putting you in a much better position to weather the financial storm that is currently battering the economy. Even in the depths of a financial winter, smart consumers can still find monetary havens and credit card deals.