IF you’re paying interest on your credit cards it could be costing you thousands of pounds unnecessarily.
By switching to a 0 per cent card, you can avoid paying interest entirely and use the money you save to pay down your debts faster.
ITV Martin Lewis’ quick teo minute check will tell you if you can save hundreds of pounds on your credit card bills
Sounds easy – but the tricky part is finding out whether you’re an eligible for a 0 per cent card – without damaging your credit score.
Fortunately, Martin Lewis, the founder of MoneySavingExpert.com has created a quick two-minute test to show you which 0 per cent cards you’re likely to qualify for.
Even better, the eligibility checker uses something called a “soft search”, which means that it won’t affect your credit score.
When you apply for a credit card, if you get rejected for any reason it often has a negative impact on your credit rating, making it harder to get accepted if you apply for credit in the future.
A soft search takes details such as your income, address and marital status, and uses it to show you the likelihood of being accepted for various products.
If the chances are high, you can apply feeling fairly confident you’ll be accepted, if they’re not so good you can look for a different product.
You can use the MoneySavingExpert two-minute checker here.
How do 0 per cent credit cards work
These are cards that don’t charge interest on certain kinds of transactions for a set promotional period. There are three main kinds:
Balance transfer cards – These cards allow you to transfer debts from another credit card and won’t charge you any interest on the balance for the set introductory period.They’re great if you want to concentrate on paying off a big debt or loan, without worrying about racking up interest.Some of them charge a fee for transferring your money – but it should be less than you’ll save in interest.
Money transfer cards – These cards allow you to put money in your current account, great if you’re in danger of slipping into an unplanned overdraft.You won’t be charged interest for a set period of time, meaning you can spread the cost of a big purchase without worrying.
Purchase cards – These allow you to shop stress-free as you won’t pay interest on purchases for a set period of time.Make sure you clear your debts before the period is over
The best kind for stopping interest payments on credit card debt is a balance transfer card.
The five golden rules of using a balance transfer cardTHESE are the rules you must always follow when using a 0 per cent card, according to moneysavingexpert.com
Always clear your debt before the 0 per cent offer ends – otherwise you can end up getting stung with high interest payments. If you can’t pay it all off, try to shift the debt to another balance transfer card,
Repay at least the monthly minimum – If you don’t the company will sometimes take the 0 per cent deal away from you. Ideally you should be paying more than the minimum anyway.
Don’t use the card to spend or withdraw cash – you can end up paying a hefty interest bill. Use a different card for spending.
Always check eligibility – to make sure you protect your credit rating
Check the deal you actually get – when a product is advertised as ‘up to’ only the consumers with the best credit scores are likely to get the deal. If you have a poorer score you might get a shorter 0 per cent period. Make sure you know how long you have to pay your debt back.
How much money could I save?
How much you can save by switching to a 0 per cent card, depends on how much interest you’re paying and how quickly you’re paying off your debts.
Look at your monthly interest payments and add them up to see what you could save each year.
For many people, the difference could be thousands of pounds.
For example, someone with a £1,000 balance on a typical credit card could save £98 in interest payments over a year if they switched to a balance transfer card.
This would add up to £293 over three years.
Someone who owed a more substantial £5,000 would save a whopping £488 in interest over 12 months.
Over three years this would add up to an eye-watering £1,465.
A MoneySavingExpert.com user Hayley said: “I finally got off my backside and did a balance transfer. Thanks to @MartinSLewis and @MoneySavingExp for making it so easy. Here’s to saving £300/yr.”
The best balance transfer cards on the marketTHESE are the five best 0 per cent balance transfer cards available at the moment, according to MoneyFacts.co.uk
MBNA Limited Long 0% Balance Transfer Mastercard – find out moreIntroductory Rate: 0 per centIntroductory offer period: 29 months from date of card issueBalance transfer fee: 2.75 per centPurchases APR: 19.90 per cent
Halifax 29 Month Balance Transfer Credit Card Mastercard – find out moreIntroductory Rate: 0 per centIntroductory offer period: 29 months from date of card issueBalance transfer fee: 3:00 per centPurchases APR: 19.90 per cent
Sainsbury’s Bank Balance Transfer Credit Card Mastercard – find out moreIntroductory Rate: 0 per centIntroductory offer period: 29 months from date of transferBalance transfer fee: 3:00 per cent (£3 minimum)Purchases APR: 19.90 per cent
HSBC Balance Transfer Credit Card Visa – find out moreIntroductory Rate: 0 per centIntroductory offer period: 29 months from date of transferBalance transfer fee: 1.40 per cent (£5 minimum)Purchases APR: 21.90 per cent
Barclaycard Platinum 28 Month Balance Transfer Visa – find out moreIntroductory Rate: 0 per centIntroductory offer period: 29 months from date of card issueBalance transfer fee: 1.75 per centPurchases APR: 19.90 per cent
How to choose the right 0 per cent card
There are three main things to consider when it comes to choosing a card.
The first is how long the 0 per cent offer will last.
Balance transfer cards are only interest-free for a limited introductory time period.
The longer this is, the longer you’ll have to pay back the debt without paying interest.
The second thing to consider is the interest you’d have to pay once the offer is over.
This can vary substantially from card to card.
Ideally, you want to make sure you clear all your debt before the offer expires, but it’s worth checking what you’d have to pay if you don’t manage to.
The third consideration is the transfer fee. Most 0 per cent cards will charge you a small percentage to transfer your money across.
It should be less than you save in interest payments, but if two cards are otherwise equal you’ll want the lower fee.
Don’t forget that not every customer is eligible for every card. So you want to pick the best card among those that you’re likely to be accepted for.
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