Taking control of your card debt

Are you paying interest on credit or store cards? If so, it may be worth considering if you could consolidate what you owe with a balance transfer credit card.

This type of card lets you pay off your debt on other cards and bring it all together in one new outstanding balance. The idea is to swap your existing expensive card debt for a new deal at a much lower rate of interest – often 0%.  

This means more of your monthly repayment goes on reducing what you owe rather than on interest and can help you repay your debt quicker. And if you’re transferring lots of different card debts, one new monthly payment which covers it all can make it easier to look after your money. Your new lower rate of interest usually lasts only for a set period, though. So plan to repay all of your debt by the end of the balance transfer deal or the rate you pay will increase to what’s called the standard purchase rate. 

Here are the main types of balance transfer to choose from:

• 0% interest balance transfer, with fee: With no interest to pay for a long set period – up to 30+ months depending on the card provider – this can help you if you need more time to pay off your debt. There’s a transfer fee for these lengthy 0% deals (often between 2% and 4% on the balance transferred on each card) so check before you apply.
• No-fee balance transfer: These cards tend to offer 0% interest for a shorter period – 15 months instead of 30 say - but won’t charge a transfer fee on each card debt you consolidate. This can suit smaller debts where you know you’ll be able to clear what you owe quickly.
• ‘Combo’ 0% card: With 0% interest on balance transfers and new spending for a set period, you can use this type of card for paying down existing expensive debts as well as spreading the cost of new purchases. Always check for fees on any balance transfers.

If you think a balance transfer credit card could help you take control of your debt, make sure you consider the following:

• Always make at least the minimum monthly repayment. Miss a payment and your 0% deal could be voided with higher interest rates to pay instead. If you only make the minimum payment, you may not clear your debt before the deal ends.
• Spending on a balance transfer card outside of an interest-free promotional period? To avoid paying interest, clear this new purchase debt each month. Be sure that any new spending on the card is affordable.
• Aim for a 0% deal where you think you’ll have enough time to be able to pay down what you owe. Put a date in your diary to remind you when the transfer deal ends, or add notes to your calendar if it helps. This way, you can check if you’re on target to repay it all before your offer expires. If you haven’t paid off your balance by the end date, your interest rate will jump up to the standard purchase rate. 
• It may help to have a healthy credit score to be eligible for the best balance transfer credit card offers.

If you think a balance transfer card could be an option for you to consider, here are the details of our range of cards