Credit Card Tarts

The typical adult in the UK carries two to three credit cards and and many switch issuers sometimes as often as every six months to a year.  These are the Credit Card Tarts, who are constantly flipping balances in search of no interest payment nirvana.

It clearly is a temptation, when organising long term credit card financing, to keep switching amongst 0% balance transfer cards.  For example, Virgin Money offers a card which let's you carry a balance for the first 15 months at zero percent interest on balance transfers.  However, while this may sound like an irresistable offer, there are very good reasons to stop regularly switching cards.

The first reason to consider is that when you move on to a new card, you generally will have to pay up to 3 percent of the balance.  So if your balance is £5,000 you could have to part with as much as £150 just to make the switch.  Secondly, this also leads to the temtation to simply put off making payments to try to recoup some of these costs.

One solution to consider consists of a Life Balance Card.  This type of card offers a flat interest rate which is lower than on typical credit cards.  A typical life balance card may charge you 12.5%, whilst a typical card from, say 15.0% or higher.  Some have much lower rates, for example the Barclaycard Simplicity card's APR is only 6.8%.  This is a viable option to taking out a secured loan, with a lot less risk.

Another matter to consider when tempted to move your balance is whether or not you have missed any payments.  Millions of UK consumers miss payments at one point or another over a year and this can be a very costly addition to existing debt.  These missed payments are also listed in your credit record and could make it difficult to obtain a new card in the future. 

Finally, it is tempting as well to forget about finally paying off the balance at all.  Once you've chased down a few zero balance card deals, your efforts can become derailed in search of more transfer deals, when you should really be working on a payment plan to finally pay down the debt for good.  With some rates in the low 6 percent becoming available, this should make paying off your debt for good a more reasonable prospect.

-by Ed Ward, Finance and Research Analyst for Camelot Finance. Submit your personal finance related questions to enquiries@camelotfinance.co.uk and see them answered here! Apply for a mortgage or a personal loan for any purpose today and we will provide your with a free, no obligation loan offer.