Rate surfing can be a good way to pay down debt, but it can also be dangerous. Make sure you do it right to avoid long-term damage to your credit rating.
Research on Surfing Rates
First, look into the current credit card interest rates to see which one is best for your situation. Many people choose deals with no interest because they can use the payments they make to pay off any other debt they have. Most of the time, these deals only last for a short time (between three and twelve months), so smart rate surfers will need to keep an eye out for the next one.
Keeping an eye on interest rates on credit cards
In order for rate surfing to work, you must switch to the next card before the low-interest period ends. If you don't, you could end up having to pay a lot of money. If you use more than one credit card to surf the web, you'll need to keep track of when each offer ends so you don't miss out. To remember these dates, you can just write them down on a piece of paper.
Some people may find it easier to use a spreadsheet for this job. Use a calendar to keep track of when you need to apply for new cards and move money, no matter what system you use. If you have an electronic calendar, set these dates to automatically remind you. So, you'll always know when it's time to transfer the balance on your credit card.
There are a lot of websites that make it easy to compare credit card deals and find cards to switch to. On the same sites, you can also see if the 0% credit cards offer other perks, like air miles, vouchers, cash back, or donations to charity.
Fees for transferring money
One thing to think about is the rate that is charged for transferring a balance. Rate shopping is becoming more and more popular, so many credit card companies now charge a one-time balance transfer fee of about 2% of the amount transferred. This can add up quickly if you are sending large amounts of money or using several credit cards. There are still a few cards that don't charge this fee, so it's worth looking around to find one.
Set up your rate-shopping
Rate surfing works best when it is well organised. For example, you might want to set up a standing order through your bank to make your credit card payments automatically. So, you'll always be able to pay your credit card bill on time, and you won't have to worry about hurting your credit score.
Rate-shopping is best for people who want to pay off a debt. Adding more money to a balance that has already been transferred won't help reach this goal. Also, credit card companies may charge different rates of interest on new purchases. This could make the debt worse instead of better. Rate surfing is a way that most people can get out of debt if they are a little bit organised.
