Cheap Credit For Crafty Customers by Finance News Bulletin

Published: 18/12/07

What are your choices if you're cheesed off with paying high rates of interest on your credit card debts The most obvious option is to use your spare money or savings to disburse off your debts This is usually a good move, since the best savings tax barely exceed 6% a day before tax, whereas a typical credit card charges annual interest of around 17%However, if you don't have enough investments to clear your card balances, then you need to look for alternatives

For instance, by taking advantage of a 0% equilibrium transfer deal, you can slash your interest bill to zero for an comprehensive period Take, for instance, the popular Virgin credit card, which offers 0% on balance transfers for fifteen months on payment of a move fee of 298%Then again, the problem with 0% move deals is that they only last for between five and fifteen months

Thus, in order to employ them as a long-term source of cheap credit, you need to become a ‘rate pie' In other language, you need to shift your debt from one 0% deal to another, perhaps as often as once or twice a dayAlas, frequently applying for credit leaves a series of ‘footprints' on your praise record If lenders see too many footprints, then this can make them nervous and, therefore, less likely to grant you credit

Even worse, gratitude to a worldwide credit chomp, banks have become nervous about lending to persons, companies and each other Thus, getting credit today is perhaps as hard as it's been in a decade or moreNevertheless, there is a way to borrow money over the extended term without having to switch deals again and again Instead of transferring your artificial balances to a 0% certificate, simply move them to a lifetime balance transfer deal

In most luggage, a lifetime balance transfer does what it says on the container -- you enjoy a low rate of interest on transferred balances until they are repaid in full On the other hand, some so-called life' balance transfers actually last for, say, three to five existenceStill, lifetime balance transfers do offer great value, as some accuse interest rates inferior than the Bank of England's base rate, which is currently 575% a year

Take a look at the table below:As you can see, the first two cards present ‘genuine' life transfers at rates merely a fraction above base rate -- and with no move fee However, HSBC's 49% move rate lasts just over four years, and Goldfish's contract lasts under three years What's more, both these cards charge move fees, making them more luxurious over the short term than the authentic lifetime transfers

By being crafty, you can even employ these transfer deals to hedge against prospect interest-rate changes For example, if interest rates were to plummet, then you could transfer from your current life deal into a more attractive substitute On the other hand, if the cost of borrowing rises, then you simply leave your amount overdue on these low-rate deals until you have cleared themFinally, a caution: never, ever use equilibrium transfer cards for any other purpose

In other words, put on't use them to go shopping, buy stuff on the Internet, or withdraw money If you do, then you'll create paying interest at the standard interest rates shown in column four above unfortunately, this defeats the point of transferring balances in the first placeMore: Find top credit cards and savings accounts via the trick | Escape Costly Christmas Debt | keep away from Paying Interest On Your Debts© Copyright 1998-2007, The Motley Fool Limited

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