The spring is a great time to consider transferring your credit card balance. With lots of interest free credit cards on offer, as banks compete for your business, you can end up saving hundreds of pounds by switching to the best balance transfer credit cards.
However, if you are transferring your credit card balance, it is vital that you avoid these three common mistakes.
1. Using your balance transfer credit cards to buy goods
Always remember that a 0% or low interest rate balance transfer deal means that the interest on your balance will be low. However, it doesn’t mean that the interest on your purchases will be low. In fact, it may be the case that your purchases are charged at a much higher interest rate.
Even though your card payments are now allocated to the highest interest rate first, it is worth trying to keep your cards separate. Use one card for balance transfers and one for purchases.
2. Ignoring switching fees
Most credit cards charge a fee when you transfer a balance – often around 2.5 to 3% of the total transferred balance. So, make sure that you take any fees and charges into account when you compare credit cards.
If you expect to be able to repay your total balance in the near future, you could actually save money by staying with your existing credit card than paying fees and charges to a new card provider.
3. Not making your balance transfer immediately
The low interest period on balance transfer credit cards typically begins from the date your application is approved (and sometimes companies give you just a 60-day window to do a balance transfer), not the date you transfer the balance. So, if you delay in actually transferring your balance from one card to another, you will miss out on part of your interest free period.
When you make your application, many companies will let you specify any balance you wish to transfer to their interest free credit cards. Always do this as it maximises the benefit you receive from the promotional rate.
