The millennial weapon they call a money savvy 0% balance transfer...
So, you watched the above video and here you are....
I speak about this concept regularly in my Millennial Money seminars and it has the ability to save you hundreds of pounds a year, whilst simultaneously provide a quick win to give you the morale boost you need for crushing your credit card headaches!
What is a 0% Balance Transfer Credit Card?
My jargon free definition - It’s when you shift existing debt from your credit card/s to one that charges 0% interest for a certain period of time. It’s an amazing tool for those who want to reduce their high rate of interest on existing credit card debt.
How does it work then?
So, you bought the latest designer watch, which means you are now sitting on £250 of credit card debt - ouch! Your current rate of interest stands at 19%. If you move your outstanding debt to a 0% balance transfer card, you pay ZERO interest until the deal expires. For those with a bulletproof credit score, you could bag an interest free period of up to 40 months!
Hint 1: There is often a fee applied to shifting your debt across to a 0% balance transfer card, which can sit anywhere between 1-3%. However, banks want your money so bad these days that if you pick the right card…you can get this for FREE.
Hint 2: Nonetheless, there is no such thing as a free lunch. The trick is to clear all the debt by the end of the 0% deal, otherwise your provider jacks up the interest rate and your costs skyrocket!!
MY TOP 5 THINGS TO NOTE:
- Click here to use a money savvy tool which calculates how long it will take you to pay off existing debt on your current monthly repayments.
- Always ensure you factor fees into your calculation of, "how much money will I save by doing getting a 0% balance transfer deal?" For example, if you transferred £1,250 of debt across with a fee of 3% being applied for doing so….this would cost you £37.50.
- Don't spend on these cards or withdraw cash. Just because you are paying 0% interest on servicing your existing debt, it doesn’t mean you also get 0% on purchases and withdrawals - so, check the fine print!
- Always repay the set monthly minimum (ideally more), otherwise you could get slapped with penalties and could even lose your deal.
- Don’t apply for too many credit cards at any one time. Use eligibility calculators to check your likelihood of success - this will ensure your credit score does not have a dirty foot print. Here is a video to explain what I mean...
Compare 0% Balance Transfer Cards to get going - cheeky tip...if a deal says 'up to' when discussing the duration, you may not get the headline offer...so don't get hyped too easily!!
The name of the game is not to use this tool as a vehicle for spending cash on things you don't need to impress people you don't even like! The brutal truth is, this is why we often find ourselves in serious debt. If suitable for you and your credit situation, use this as a healthy step to change the way you think and feel about money.