Those Free APR Credit Card Deals
Many credit card providers throughout the UK are now offering interest-free bargains. Among these card companies are Morgan Stanley, Capital One, Citibank, Royal Bank of Scotland, Sainsbury’s, Halifax and Tesco.
Most credit consumers will consider this outstanding news since it will possibly save them several hundred pounds in interest. For instance, a person who has a £2,000 balance on their NatWest Standard credit card, at an APR (annual percentage rate) of 17.4 percent. If they just pay the minimum amount due each month, they will pay over nine months £295 in interest this compared to with a Halifax card rate, which will be zero.
The key to getting the best deal when sorting through all of the bargains is compare, compare, compare, there are literally hundreds of cards for you to take a look at.
Some consumer authorities are worried that the increasing number of interest-free deals might encourage people to assume more debt than they can handle. This, in fact, is a major contributor to the increasing amount of consumer debt throughout the UK. According to an estimate from the British Banker’s Association, the typical UK household owes £7,000 on their personal loans and credit cards.
There is, however, much benefit from cards which offer this interest-free period. They can help spread the cost of Christmas presents, holidays, or other big purchases, over along period. They can also be used to transfer one of your existing debts so that you then only repay the capital, accruing no interest in the process.
Still, understand that at the end of the 0% deal period, your rate will rise substantially. In the example we mentioned above with the Halifax card, your 0% interest payments will suddenly increase to 16.9%, indeed, most credit cards’ fees run between 13.9 and 16.9%.
The lesson to be learned: Don’t use an interest-free period as a rationale for making only the minimum monthly payment. Instead, do your best to completely clear your balance by the time the offer ends.
If, when the introductory offer ends, you find that there is still money that is owed that has not yet been fully cleared, there’s an alternative to paying the high APR. Instead, take out an additional card that has a lower rate, and then transfer your balance over to it. This is a wise tactic for taking advantage of the free APR period and then avoiding those exorbitant fees at the end of the free period.
Another suggestion is to consider taking out a credit card that has a low-balance rate of transfer. A good one is Capital One’s No Hassle Platinum; it charges just 4.0% for all of your balance transfers, a rate which will last until you are able to clear your debt.
The key to staying on top of your credit card debt is to make the offers work in your favour more than in the card company’s. By all means, take advantage of the deals they offer, especially the introductory 0% interest payments but don’t let them lure you into paying an exorbitant amount at the end of the period. Find a way to make the deals help your finances rather than hurting them.
