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Balance Transfers

Low-interest or 0% UK balance transfers provide an excellent way to save on credit card interest and to manage credit card debt. Getting the most for your money depends on how the balance transfer card is handled and on how much it costs to get it.

With excellent credit, you'll have access to many 0% offers. With good credit, you'll probably be eligible for balance transfers with interest rates below 3%. When you apply for a credit card with a zero or low-interest rate, you can transfer your high-interest credit balances to the new card.

The first consideration is that UK balance transfer offers are promotional. While the rare offer extends for the life of the balance, most are of 6-12 months duration. After that, the regular interest rate on the card becomes effective.

To transfer balances and avoid paying interest, you'll have to pay off the transferred debt within the promotional period, before the regular interest rate kicks in. If the new card offers a lower regular interest rate than the cards you transferred the balances from, you'll still save money, but it will amount to considerably less.

"Tarting" is used by some consumers to extend the low-interest period if they can't pay off the balance within the promotional period. Tarting means transferring the balance again, to another low-interest card, to extend the low-interest repayment period.

Because you can't tart your balance to another card until the promotional period expires, there's no guarantee that a new offer will be extended. Opening new credit accounts can adversely affect your credit score, so the second transfer may not come as easily as the first. Opening a series of new accounts to avoid interest over a short time will almost certainly affect your credit score, so this strategy is not advisable.

Unless your new card includes a 0% interest rate on purchases, don't use the balance transfer card to buy things. Payments are applied only to the transferred balance until it's paid off. Meanwhile, your purchases accrue interest at the regular rate. The interest on purchases can mount until your savings on the transfer are negated.

Be sure to consider the balance transfer fee. The best deals offer a "no fee" balance transfer, but usually you'll be charged a percentage of the transferred amount straight off. Make sure this fee won't cancel out what you'll be saving in interest with the transfer.

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