Jumping from one credit card to another has become common. The term "balance transfer" refers to the practise of moving debt balances from one credit card to another to get better interest rates. But how useful is it for people to switch credit cards?
The amount of debt that people in the UK have is shocking. In the past five years, people have borrowed more than 50% more than they did before. It makes sense that people want to find new ways to get out of debt. One possible solution is credit card jumping.
Ways to save money
By taking advantage of the latest credit card balance transfer deals, people with a lot of debt can save hundreds of pounds in interest. Many of them have an interest rate of 0% for a set amount of time, like three, six, nine, or even 12 months.
People can sometimes transfer balances from store cards and even outstanding loan amounts to a credit card with no interest. Checking to see if these transactions also get the 0% balance transfer rate is a good idea.
When you move a balance to a credit card with no interest, any payments you make go toward paying off the balance, not the interest. This brings down the amount owed, which is good news for people who are using this to get out of debt. Many card issuers do charge a fee to transfer a balance from one card to another. This is done to stop people from jumping from one credit card to another.
Credit Card Jumping: How to Get the Most Out of It
To get the most out of 0% credit cards, many smart people switch from one card to another when the introductory rate period ends. This takes some planning, but when people move money (or rather, debt) from one credit card to another, their debt balances can keep going down. People who don't move their debt at the right time usually end up paying a much higher interest rate and not getting rid of their debt. When people pay on time, this plan works best. When people don't pay on time, they may have to pay fees that add to their debt.
People who have a lot of debt and use a lot of credit cards to pay it off should think about setting up standing orders to make payments automatically. You can also use a spreadsheet or calendar programme to keep track of when it's time to move on to the next credit card.
Other Reasons to
Credit card jumping can help people get out of debt as long as they don't take on any more debt. There are also other benefits to using 0% cards, like donations to charity, rewards points, air miles, travel insurance, and a lot more. It's worth it to look around for the best interest-saving rate and a reward.
Summary
Jumping from one credit card to another can be a good idea for people who:
Well-organized about how to handle debt
Working to pay off a big debt
Be ready to shop around for the best deals on balance transfers
Able to pay on time every time so they don't hurt their credit score.