Credit card balance transfers
My financial deal of the week is credit card balance transfers. There’s no argument that the credit crunch is making it harder than ever to borrow money, be it mortgages, on credit cards or personal loans. And many of the best credit card deals (long-term O% on purchases and free balance transfers) have been quietly withdrawn by lenders. But if you know where to look there are still good deals, and one of the most lucrative involves ‘churning’ your credit card debt. In simple terms, switching it to a NEW credit card.
A year ago, you could have done this free of charge, so desperate were the banks to lend us all money, but typically now there is an arrangement fee, usually around 3%. However, compared to the 15% or so many of us are paying on our monthly credit cards, that’s a tiny price to pay. One of the best deals just now is the Virgin credit card which is offering 15 months free credit on balance transfers, with a 2.98% handling fee. Transfer in a balance of £10,000 off your old card and you will, therefore, pay a one-off £298. HSBC’s credit card meanwhile is offering a 13-month deal, but the handling fee is just 2.5%, so we’d say it’s worth going for that one in anticipation of looking for a new deal when that expires.
As ever, you shouldn’t see this as free money … the whole point is saving money on the interest but remember that the capital sum still has to be repaid sometime, so you should use the cards for your regular spending, rather than racking up new debts on luxury purchases. Enough of the lectures though … they are a great deal if you can get one.
