Making 0% work for you
There are two types of 0% credit card offers that may interest the discerning customer with 0% on cash purchases and 0% on balance transfers. They sound similar but they work in very different ways, with each one suited to specific types of customers with different requirements. So how can these offers benefit you and your finances and help you reduce the cost of borrowing? If you are scratching your head over the myriad deals on offer, then here are a few guidelines that may help you reach the right decision.
There are two types of 0% credit card offers with 0% on cash purchases and 0% on balance transfers. Many cards are now offering both of these services, but there are restrictions. The length of time that the 0% offer period lasts varies depending on the provider. If you have an existing balance on a card then it may be worth looking at the 0% balance transfer option so that you can transfer your balance and reduce your interest payments. If you want to make one-off cash purchases and pay the total amount back over a number of months, then the 0% cash purchases option will be more attractive.
The other type of 0% credit card offer is on balance transfers. This type of card allows you to transfer an existing balance onto your 0% card and then pay it off within the offer's timeframe. This is good news if you are already paying interest on a credit card balance. The most common type of offer on the market today gives you around 12 month's interest free on balance transfers. If you transferred £3000 onto a 0% balance transfer card with a 12-month offer, you could clear the amount free of interest with repayments of £250 per month.
Common practice has been for many people to transfer their balances and then transfer again at the end of the offer period. For example, if you transferred £3000 and then only paid off £100 per month, after 12 months you would have only paid off £1200 before interest charges started on the remaining balance. However, you could then transfer the remaining £1800 onto another 0% balance transfer card and repeat the process again. To stop people doing this, credit card companies introduced a balance transfer fee, usually around 3%. If you transfer £3000 you will be charged an additional £90 for the privilege of ;Card hopping'.
Perhaps you want something special but are one of these people who find it impossible to save. If so, you could consider making the purchase with a 0% on purchases card. These cards can also come in handy if something unexpected happens and you need to buy something urgently; perhaps your washing machine has blown up or your car needs essential work. The advantage of a 0% on purchases offer is you can make the purchase when you need it most, and spread the cost over several months, with no additional interest charges.
Both types of 0% cards have their uses and both can help financially in different walks of life. As with all credit cards, 0% credit cards can be applied for online. When applying for a new card you will need to take a long, hard look at your credit rating. Your credit rating is a record of credit information held by the three credit referencing agencies. It is this record that financial companies use when deciding to offer you credit and determines whether you will be accepted as a customer. To compare credit cards you can always visit a price comparison site that lists all of the major companies and other less well-known cards in an easy to use format. Once you have done this you can simply apply for the card.
There are two types of 0% credit card offers with 0% on cash purchases and 0% on balance transfers. Many cards are now offering both of these services, but there are restrictions. The length of time that the 0% offer period lasts varies depending on the provider. If you have an existing balance on a card then it may be worth looking at the 0% balance transfer option so that you can transfer your balance and reduce your interest payments. If you want to make one-off cash purchases and pay the total amount back over a number of months, then the 0% cash purchases option will be more attractive.
The other type of 0% credit card offer is on balance transfers. This type of card allows you to transfer an existing balance onto your 0% card and then pay it off within the offer's timeframe. This is good news if you are already paying interest on a credit card balance. The most common type of offer on the market today gives you around 12 month's interest free on balance transfers. If you transferred £3000 onto a 0% balance transfer card with a 12-month offer, you could clear the amount free of interest with repayments of £250 per month.
Common practice has been for many people to transfer their balances and then transfer again at the end of the offer period. For example, if you transferred £3000 and then only paid off £100 per month, after 12 months you would have only paid off £1200 before interest charges started on the remaining balance. However, you could then transfer the remaining £1800 onto another 0% balance transfer card and repeat the process again. To stop people doing this, credit card companies introduced a balance transfer fee, usually around 3%. If you transfer £3000 you will be charged an additional £90 for the privilege of ;Card hopping'.
Perhaps you want something special but are one of these people who find it impossible to save. If so, you could consider making the purchase with a 0% on purchases card. These cards can also come in handy if something unexpected happens and you need to buy something urgently; perhaps your washing machine has blown up or your car needs essential work. The advantage of a 0% on purchases offer is you can make the purchase when you need it most, and spread the cost over several months, with no additional interest charges.
Both types of 0% cards have their uses and both can help financially in different walks of life. As with all credit cards, 0% credit cards can be applied for online. When applying for a new card you will need to take a long, hard look at your credit rating. Your credit rating is a record of credit information held by the three credit referencing agencies. It is this record that financial companies use when deciding to offer you credit and determines whether you will be accepted as a customer. To compare credit cards you can always visit a price comparison site that lists all of the major companies and other less well-known cards in an easy to use format. Once you have done this you can simply apply for the card.
About the Author:
Josh White writes for various websites mainly in the financial industry. You can read more about Credit card offers and the 0 percent credit card here.
posted by Credit Counseling at
3:38 AM
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