A guide to 0% balance transfer cards

Nowadays a lot more of us are taking out credit cards that come with balance transfer deals. The deals you may be given here will vary from card provider to provider — one of the most popular options is that given by 0% balance transfer cards. Let’s take a look at how this might work for you.

A credit card that has any kind of balance transfer offer comes with a basic deal. This is designed to encourage new customers to sign up for a card. So, if you transfer across your balance from one or more existing credit cards to a new one then the card provider will offer you a kind of discount as a reward. This discount takes the form of a reduced interest rate or, as we’re looking at here, zero interest.

So, with 0% balance transfer cards you may well find that the balance that you transfer to your new credit card company does away with your interest charges for a time. Your previous card supplier may have been charging you high rates of interest on the money you owe. Your new supplier may be offering you a better solution.

The way this works is simple. Your new card supplier will offer you a deal that gives you a period of time where the balance you transfer across has no interest at all charged on it. This is not likely to last forever — deals may be set up to last anything from a few months to over a year. And, once the deal is over, interest will be charged on any of the balance that you still owe at the rate agreed when you signed up for the card.

You might find that some 0% balance transfer cards come with additional offers to make them look more attractive. Some, for example, may come with 0% interest deals on new purchases. So, for example, you might be offered a deal where you get 0% charged on your transferred balance and on anything you spend on the card. In some cases the two deals may be offered for the same period of time. In others the new purchases deal may only be offered for a shorter period.

One thing that you may want to think about here when you are comparing cards is the standard interest rate on offer. This is the rate of interest that will be used when your deal is finished and it may also be the rate that you have to pay on new spending. In some cases the rate here may be quite high so you may want to shop around to find the best deal.

0% balance transfer cards may well, however, be a suitable solution for some consumers who want to try and repay their credit card borrowings. Many people find that they get some breathing space here where they don’t have to worry about having interest added on to their debts and can make a real effort to pay them off once and for all.