Credit cards- there’s good news, and there’s bad news.
There’s swings and roundabouts in everything in life, and credit cards are no different. There is good news, but also some bad news for those dabbling in plastic.
The good news is that, given people are less inclined to go silly on borrowed money these days, credit card companies are jostling with each other to attract new customers, and the best deals are available on 0% cards with balance transfers.
Figures from moneysupermarket.com show that balance transfer fees are at their lowest for five years, and even since last year, the cost of an average £3,000 balance transfer would have reduced from £91.20 to £84 today.
Interest-free periods on 0% cards are also longer than ever, with Barclaycard now offering a 27 month free period, with other cards not far behind at 25 and 26 months. Just four years ago, in 2009, the maximum was between 13 and 16 months. That's like half as long.
However, the bad news is that average APR rates have been going up since 2009. Back then, the average rate was 16.4%; now the average rate tops 18.7%. It’s almost like the credit card companies will bend over backwards to get you in the net, but once they’ve got you, you’re the one bending over.
Of course, the way to beat the system is to keep moving a debt to 0% cards until you can pay it off, but if you want to continue using a card, make sure the one you go for has 0% covering purchases as well. And remember to switch again at the end of the interest-free period- even if you can’t get another 0% card, there are lower-rate cards on the market. Finally, if you have old cards that you aren’t using after your balance transfer, close the account. This will remove the temptation to use them and will also improve your credit rating for the next time you apply- lenders can get nervous if you have too much credit available and you may get turned down for a new card because of an old lingering one.