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Hanging in the balance: Finance experts urge borrowers in debt to change cards quick
It's sad but true that hundreds of thousands of consumers are wallowing in debt in recessionary Britain. However, even though getting new credit cards is usually not the answer to solve a high amount of debt and a bad credit record, many consumers are beginning to see a knight in shining armour in the form of cards with 0% balance transfer.
Experts have advised of some credit cards that offer 0% interest on balance transfers for up to 16 months in one instance. This can mean the opportunity to consolidate debt with monthly repayments without adding interest on monthly, which gets you further away from reaching your goal: repayment.
It is still very much a case of shop around, however. This is due to the fact that most credit card companies that offer 0% balance transfers apply a small percentage of the overall balance and add it onto the outstanding debt – one credit card had such a fee of 2.98%.
There are stark warnings for consumers with bad credit who are deciding to use these cards. The temptation can be great, but one financier has warned that not repaying a balance by the end of the 0% balance transfer period could result in phenomenal amounts of interest being paid. Further, it has been urged that people do not purchase on cards they are using to consolidate their debts.
Unfortunately, for most people with bad credit who need cards with low balance-transfer rates to consolidate debt, getting a credit card which can help them do so is proving to be harder than ever before.
Andrew Hagger is a spokesperson for MoneyNet.co.uk and said this: ""No matter which card you choose, you'll need to have a spotless credit record to be accepted for the best rates and interest-free deals as the banks are operating a much tighter risk policy in this current challenging environment."
Another advisor urged people who were considering getting such a card to think carefully and rationally before they apply, otherwise it can worsen a credit record and only make matters worse.
Peter Harrison, credit card expert at the comparison website MoneySupermarket.com says: "It is imperative that people take care when applying for credit cards. Those that are too reckless in their applications may find their credit records fouled with a litany of failed attempts to secure credit."