When you decide to try and reduce your debt, the first thing you will look at is your credit cards and how to find a card with a lower interest rate, so that you can put the scissors through the card that is burning a hole in your finances.
But changing card may not be the best option, as many credit card companies have little ways of getting the money back, in which they have given you in savings with accredit card with a 0% interest free period. One of the ways is when you transfer your balance from the more expensive credit card on to the 0% credit card, this will not apply to purchases, but the sting is when you use the card, you may spend £400 a month in the knowledge that you will be able to pay off this at the end of each month.
So you make your purchases, pay your statement on time and think that you have not accrued any interest on the purchases as you have paid the bill in full.
Well this is where the credit card issuer turns the tables, the cash that you have paid into your account goes towards paying the balance that was transferred to the card in the first place, meaning the £400 in new purchases will start to pile up interest, until the balance transfer is settled in full.
To deal with this, is to transfer your highest debt onto the 0% interest free credit card and then don’t use it for purchases, in the meantime if you wish to make purchases, the best thing to do, is to apply for another credit card with a 0% deal or one with a lower APR and use this for your purchases, but only in the knowledge that you are going to pay of the balance in full every month.
Some credit cards to look at for a good deal on credit cards that can be used for purchases, Sainsbury’s are offering a card that will give you a year of 0% interest on any new purchases that you make, some are offering 9 months, they include Halifax, Ulster Bank and Intelligent Finance.
If you feel that you are in a position of just wanting to clear your debt to get your head back above water, then turning to a debt counsellor will hep you for advice and the best way to get yourself out of the debt trap and if you have found a good one they’re first piece of advice, will be to clear the most expensive of your debts first.