Avoid interest on your debt until 2012
It seems that many of us were willing to forget about our financial worries for some time in the sun.
Although you may have mentally benefitted from your much needed holiday, have you figured out what it has really cost you?
According to figures published by the insolvency trade body R3, over 2 million Britons had to borrow more than £1000 for their holiday and will spend the next seven months paying it back.
Personal insolvency hit record levels early in 2010 and it looks like these numbers will soon rise so it’s important not to spend more than you earn.
What can you do?
Although the cost of your holiday and other debts can add up, there is a simple and efficient way to avoid falling into financial difficulty.
One effective way is to shift your debt to a balance transfer card so you can repay the debt in less time and save a lot of money.
Essentially, what happens is that you transfer your balance to a company that pays off your outstanding debt. You now owe your new card provider the same amount minus the interest rates.
There are a couple of things to be aware of when transferring balances. Many cards may come with an interest free period on new purchases but when the offer expires interest rates can be quite high which make them unattractive for spending.
Likewise, avoid withdrawing money from a cashpoint. Doing so will see the return of high interest rates effectively destroying the purpose of the 0% offer.
Is a 0% balance transfer credit card a good idea?
This depends on a number of factors including how much debt you have, your credit score and how quickly you can repay the debt.
If you are able to repay the balance within a year or continually shift your debts, a 0% balance transfer card may be your best option.
However, there are charges that may take affect such as a fee for the debt shifted-normally about 3%.
What is the best option?
Barclays has upped the ante in the 0% balance transfer market with the launch of its 16 month offer. The Barclaycard Platinum credit card is one of the top deals for customers who want to shift their existing debts onto an interest-free card.
With the extended interest-free period, you wouldn’t have to pay interest until 2012.
The Barclaycard Platinum credit card is matched only by Clydesdale and Yorkshire Banks Gold Master Card in the balance transfer best buy tables.
Although Barclaycard charges a 2.9% fee for balance transfers, it beats the Yorkshire and Clydesdale fee of 3% although they both come with a 16.9% APR.
Both cards offer a three-month interest-free period for any purchases you make, but be cautious. If you are transferring your existing balance think carefully about whether on not you want to increase your debt.
The NatWest Platinum credit card, The Royal Bank of Scotland Platinum credit card and the Nationwide Gold credit card are also good options. They all offer 0% on balance transfers for 15 months ensuring you will have interest-free payments until the end of 2011.
They all come with a three-month interest free period for purchases as well, however, once that time has elapsed you are looking at a 16.9% APR.
**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**
Loans - FAILING TO ADHERE TO REPAYMENT TERMS MAY RESULT IN PENALTY CHARGES AND AFFECT YOUR CREDIT HISTORY. THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. Rates may depend on your individual circumstances
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