All about Best Balance Transfer Credit Cards
We’ve spoken about the horrendous rates people are paying for their store cards and credits cards before. We’ve been having a look around at the best balance transfer credit cards currently on the market (we’ll keep this list updated as and when). Before we dig too deep, we’ll talk about balance transfer.
What is Balance Transfer?
Basically, it’s where one credit card company pays off your debt on other credit cards or store cards – this then leaves you owing money to the new company but can save you a lot of money. Here’s an example; Bob owes £2000 on a card from ‘Hand over Fist Credit Co.’ at a APR of 18%. Bob takes receives a new credit card from ‘We’re Here To Help Credit Co.’ and then transfers his £2000 debt on this new card. The bonus here is that the new card gives him 0% interest for 18 months. Quids in!
Store Cards charging up to 60x base rate!
Yes, you read that right. A report just produced shows a large number of high street names have pushed the APR on their store cards to extortionate levels. The store cards are, in effect, types of credit cards – but they can catch unwary shoppers with their guard down. True, these cards let you ‘buy now, pay later’ (with some cards offering up to 59 days of interest free credit) but with interest rates of 17% on purchases and 25% (and upwards) on cash withdrawals do you really want to be paying through the nose?
So, who are the worst offenders? Well, in some cases, you’ll be rather surprised. At the top of the list is Creation Account Cards (can be used in stores listed in the DUET network) who charge 30.9% APR! When you consider that the current base interest rate is 0.5% you get an idea of how much money you’re losing by using one of these credit cards.
Get some cash back from your credit cards…
Anyone that owns a credit card knows they can be both a curse and a life saver. The main problem with this form of credit is the cost – credit card interest rates can hit up to 30%! It would be fair to say that most of us would be better off without a credit card – it’s simply too easy to rack up a large bill then find yourself unable to pay it off. But, if you absolutely feel that you must sign up for one why not make the card work for you by taking a look at cash back credit cards.
The idea is simple; you spend using your credit card and the card company uses a reward scheme whereby you benefit in the form of a payback.
Don’t be fooled, you won’t make huge sums of money from these schemes – the typical rate offered is around 0.5% cashback on the purchase value i.e you spend £100 you get 50p back. The best cash back rates can reach up to 5% but in many cases the amount you can earn back is capped!
You also need to aware of the criteria that credit card companies set in order for you to qualify for cash back – ALWAYS, ALWAYS, ALWAYS READ THE TERMS! Did you get that? Good, make sure you do it.
Another factor to consider is this: some lenders only offer you cash back against your credit card purchases for a set, initial period whilst other lenders will base the amount of money you get back credit card on our credit card spending levels (see above; capped cash back).
The bottom line here is, where possible, avoid credit cards unless you absolutely must have one, in which case you should serious consider getting a cash back reward credit card.