Credit cards which come with 0% on balance transfers and purchases for a limited time are incredibly enticing, and used carefully, can be incredibly useful when it comes to clearing existing credit card debt.

However, any card with a 0% introductory rate on anything is likely to come with a high rate of APR for transfers and purchases once the honeymoon period is up – there are a number of things you should keep an eye on when apply for any of these cards including the following:

Time limits – how long have you got before the 0% runs out?

Keep a careful eye on the 0% introductory rate, and how long you’ve actually got to clear your debts. Cards with introductory rates typically come with high normal rates of interest

Handling fees – how much will it cost to transfer balances?

A card might boast 0% on purchases and transfers for 12 months or so, but will still charge a handling fee for balances carried over. Some cards will come with a maximum transfer fee, say around £50, and the handling fee on some which be based on a percentage of the amount you want to transfer.

It is very rare that a card with 0% on transfers will come without a handling fee – ones that do are typical low rate for life cards, which, of course charge interest for balance transfers.

Depending on the size of your debts and how long you think it will take to clear them, a handling charge could be a relatively small concession to make in terms of the amounts you would save.

0% on what, exactly?

Make sure you don’t make any purchases once you’ve transferred a balance to a card which doesn’t come with 0% on purchases and vice versa. Doing so negates the point of signing up for a 0% card in the first place.

How many cards do you have open?

Your credit rating is calculated on a number of variables, one of which is the amount of credit currently available to you in the form of outstanding balances on loans, and other credit cards. Lenders can and will often refuse you a credit card during the application process if they judge that you have ‘too much’ credit. Being refused a credit card will also count as a black mark against you when you try to apply for credit in the future – it is possible for people to get caught in a downward spiral of refusals in this way which can see them struggling to access funds for a number of years, significantly limiting their opportunities.

This entry was posted on Wednesday, March 26th, 2008 at 4:31 pm and is filed under Credit Cards. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.