Credit card customers can ‘stop paying interest’ and save up to £1,417 with this tip | Personal Finance | Finance
Credit card customers are being urged to check if they could benefit from a “balance transfer card” to slash their debt.
According to research by TotallyMoney, one in two credit card customers is paying interest on their balance each month, with the average balance increasing by 8.3 percent in the past year.
However, eligible customers can avoid paying interest by shifting their debt to a balance transfer account, subject to a small processing fee of two to four percent.
That way, people can focus on repayments, saving money and clearing their balance faster.
Currently, data from TotallyMoney shows that customers can stop paying interest for 29 months with the market-leading offer from Tesco Bank, potentially saving £1,417 on the typical interest-bearing balance of £2,901.
Those with a less-perfect score might be eligible for a 16-month card, saving £736, while those with a poor credit score might still be able to save £370 over nine months.
Alastair Douglas, TotallyMoney CEO, commented: “If you’re paying interest on your credit card each month, then you should consider a balance transfer. It’ll stop you from paying interest, so you can focus on repaying your debt. You could save hundreds, if not thousands of pounds.
Before applying for any credit product, Mr Douglas said: “Check your report to make sure all the information is correct and up to date. If you spot something that doesn’t look right, you can file a dispute to try and fix it.
“Any good, free credit report provider should also give you a personalised plan to help you improve your finances and unlock the best offers.”
Additionally, Mr Douglus urged: “Always shop around to find the best offer for your own circumstances. This means looking at different comparison sites and going directly with the banks.
“Check your eligibility before applying, and keep an eye out for offers which come with pre-approval, guaranteed credit limits, guaranteed rates, and guaranteed zero percent offer durations.
“That way you’ll know if you’ll be accepted before you apply, and you can be totally sure that you’ll get exactly what was advertised.”
Mr Douglas said those who find they’re not eligible to transfer their full balance shouldn’t be “completely put off”.
He explained: “You can still move some of the money, so you can stop paying interest on that amount.”
However, he noted: “Managing two payments might make it a bit more difficult, so it could be a good idea to set up Direct Debits.”
Most importantly, Mr Douglas noted: “Balance transfers are designed to help you stop paying interest, and so it’s important you try not to use it for spending. That includes making purchases with the card and withdrawing cash from the ATM.”
He warned: “Otherwise, you’re likely to be hit with high rates, and cash advance fees, which might make it even more difficult to manage your money and get out of debt.”
