0% Balance Transfer and Purchase Credit Cards

How to choose a 0% balance transfer and purchase credit card...

Rather than walking around with a wallet bulging with credit cards and a brain full of 4 digit numbers, why not swap it all for a more convenient credit card.

0% balance transfer and purchase credit cards are the one stop shop to shift any debt that's been lingering around, whilst also capitalising on some interest free spending.

These cards are good for:

- Balance transfers
As they offer 0% on balance transfers for an introductory period they are ideal if you need to consolidate multiple debts to one place, or perhaps move one large - interest accruing - debt from a past credit card.

- Spending
Because these credit cards offer an introductory purchase period for the same length as the balance transfer period these cards are great for spending on too.

- Peace of mind
It becomes all too easy to pick up a credit card here and there for different offers, and before you know it you've got multiple debts over multiple cards, a handful of bills to pay each month and mounting interest charges.

By getting a 0% balance transfer and purchase credit card you can remove a lot of the worry by putting all your debts in one place, whilst still getting a great deal on your purchases, not to mention the fact that you will only have one Pin number to remember.

These cards are unsuitable for:

- Replacing dedicated 0% cards
You may be forgiven for thinking that 0% balance transfer and purchase credit cards have made 0% balance transfer credit cards and 0% purchase credit cards obsolete. This is understandable considering the all-round usability of these 'all in one' cards.

However, if you just plan on using the card for a one off balance transfer, or a large one off purchase then you would be better off getting a credit card that deals with the specific area individually, rather than a combo. With an individual 0% balance credit card, or 0% purchase credit card, you will be able to get longer introductory periods than you would with a combined 0% balance transfer and purchase credit card.

Look for:

- The longest 0% period
By far and away the most important - and probably the most obvious - thing to look for is which card will offer you the longest 0% period for both balance transfers and purchases.

- Standard interest rate
Following on from this, quite logically, is which card offers the best standard rate once the honeymoon introductory period expires.

Despite the fact that we all enter the deal with good intentions it is all too easy to let things slide and then rough it out when the standard interest rate kicks in.

Most credit cards have a standard interest rate of roughly around 15% p.a.; however, some have much cheaper rates in lieu of a more expensive handling fee, or a shorter introductory rate. If you feel that you are more than likely going to use the card past the 0% phase then it would be worth weighing up whether or not a cheaper standard interest rate will warrant shortfalls in other areas.

Watch out for:

- Cash transactions
0% credit cards never offer cash transactions as part of the 0% deal. This is fairly easy to avoid most of the time by simply using a debit card at an ATM, however, cash withdrawal charges are not solely limited to taking money from ATM's, they also include:

- cash back (at the supermarket)
- foreign currency purchase
- travellers cheques
- gambling transactions (including food and drink at casinos!)

Be careful! These are all easy to slip up on, but you'll pay a heavy price if you do so, because not only will you be charged a cash handling fee, but due to the high rate of interest these transactions incur, you will only be able to pay them off after your cheap 0% balances.

- Balance transfer handling fees
To make some money from the off, 0% credit cards now - pretty much universally - charge a transfer handling fee. This is calculated as a percentage amount of the balance you are moving (usually around 2-3%).

If you plan on moving a large amount, shop around for the lowest transfer fee and look for 'capped fees' (some companies put an upper limit on the fee you are charged, saving you some cash if you are moving thousands of pounds).

Don't forget:

- Which bank you are with
Once you are focussing on getting the best deal and reading the small print it's easy to overlook the glaringly obvious – you can't transfer a balance between cards from the same bank!

When you transfer a balance, what really happens behind the scenes is that the company you move the money to, pay off your original debt and start a new one with them. Understandably, there would be no point in a bank doing this with the money you already owe them.

- Repayments
If you don't pay back the minimum required each month - usually the lesser of £5 or 5% of the total balance - you will lose your interest free periods on both your purchases and balance transfer.

It may be a wise move to set up a direct debit to ensure you never miss a payment by accident.

You can also lose your 0% deal if you go over your credit limit - what with transferring a balance and spending on the same card, this could be easy to do - so keep an eye on your account balance and don't exceed your credit limit.

- Expiry of the introductory period
With months of 0% spending and debt free repayments behind you, it's easy to forget the times before your new card. Make sure you are fully aware of when your 0% term expires so that the pre-0% times don't hit you too hard and fast.

N.B The 0% introductory period will run from when you sign your agreement, NOT when you receive you card or make your first purchase or balance transfer.

Compare 0% balance transfer and purchase credit cards