Using a 0% balance transfer credit card means people with debt can get it under control by starting to pay off the underlying debt, not just the interest.
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The typical British house has around £ 2,000 worth of credit card debt, research shows, but there is one action consumers can take to halve it.
The Money Charity estimates that every UK household has an average credit card debt of around £ 2,582.
Today, the demand for credit is increasing as it approaches Christmas , credit checking company Experian says Britons could save nearly £ 1,000 over the next three years by switching to a balance transfer card.
These cards pay off the debts on the old cards, so you owe the new card money – but at 0% interest for a period, giving you control over your repayments and paying off your debts, not the interest.
However, be sure to redeem offers before the 0% period ends, as additional interest will start to accrue.
Experian said a person in debt of £ 2,582, paying the minimum monthly payment of 3% (£ 61) with an annual interest rate of 19.9% could save around £ 33 per month if they transferred their balance .
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After factoring in the 1.5% transfer fee this translates to an overall savings of £ 995.43 over 30 months.
Experian said it saw a 27% increase in the number of people applying for a balance transfer card from September to November 2021 compared to the same period in 2019.
Experian credit expert John Webb said, “Switching to a balance transfer card can be a good option to help pay off existing credit card debt.
“Research does not affect your credit score and you can even guarantee interest rates before you apply. “
How to get a credit card with 0% balance transfer
Anyone can apply for a balance transfer credit card, but that doesn’t mean you’ll be accepted.
The good news is that there are tools out there that can help you find the best card for you and save you time.
MoneySavingExpert has a calculator on its site it will do just that.
It is better to do this than to apply for many different credit cards yourself.
This is because applying for a card can lower your credit score because it looks like you really need the money and may not be able to pay it off.
These apps can leave a note on your credit score called a “hard fingerprint,” visible to all financial companies that check it.
But using a calculator like the one from MoneySavingExpert leaves a “soft footprint,” which doesn’t affect your credit score.
If you are lucky enough to have multiple card options, go for the balance transfer card with the lowest fee in the time you have to pay off.
Also make sure that the offered offer is guaranteed, or that the advertised details are for the perfect customer – leaving you with a worse version of the product if you apply.
If you are transferring your debt to a balance transfer card, try to clear the debt before the 0% period ends. If you can’t, transfer your debt to another card at 0%.
If you miss your monthly payments to the credit card company, it can kick off the offer at 0% and increase the amount you pay back.
So setting up a direct debit is a good idea to make sure you never miss a payment.