0% Balance Transfer Credit Cards Will Not Last

Have you ever been persuaded to a credit card because it pledge you an outstanding interest rate that seems just too good to be true? Most of us have a few stages jumped for one of these alluring offers. There are a growing number of credit card providers out there that will propose you 0% deals on either balance transfers or purchases, and once again they just seem too good to resist.

Particularly if you have a large remaining credit card balance that you are currently paying a lot of interest on, this proposal will be very tempting. In fact, many 0% balance move offers will save you hundreds of pounds on interest that you would unless you have had to pay on your credit card balance. But no matter how alluring such offers may appear at the time, you can only ever take on another credit card if you have taken the time to review your finances and are contented that it is the right financial move for you at this time.

To look at a usual example, suppose you have one thousand pounds outstanding on a credit card that charges 10% APR. This way that over the course of a year, this balance will cost you 100 pounds in interest charges. Now assume you find a credit card that offers you 0% on balance move for six months. Well it is pretty clear that 0% is better than 10 and if you were to take up this offer, assuming there are no balance transfer fees, then how cost will you have saved over the six month interest free period? The answer is 50 pounds. Nevertheless, what will the interest rate revert to once the interest free period has come to an end? This is anything you should be thinking about before you opt for the credit card, and not when the interest free period is about to expire and everything is more essential. Imagine, for the sake of our example that the interest rate reverts to a rate of 25%. This process that over the next six months you will pay £125 in interest.

While this is a very easy example, it explains an important point when it comes to 0% balance transfers. In the example above if the customer had stayed with his 10% card, he would have paid £100 in interest over a 12 month period. In the same period, by opting for a 0% balance transfer for six months that then reverted to 25%, he ended up paying £125.

The point to keep in mind is that just because a credit card offers you 0% does not signify it is the best deal out there. Look at the long term rates that the card will offer you, and compare these to the rates you are already taking from your credit card. If your being rate is better than the rates that you will get from the new card once the introductory offer ends, then maybe you should remain loyal to the card you have.

So if this is going on you will not be spending on the new credit card, but you will be safe in the knowledge that you are saving the interest payments on the old debt.