Credit Card Balance Transfer Risks
Posted March 2nd, 2009 Credit card balance transfers involves switching credit card debts between cards to take advantage of 0% balance transfers. This tactic allows you to save on interest payments.
The catch to this tactic is that you way not be able to carry on with credit card abalance transfers forever. The risk is you may stop being approved for balance transfers, which could leave you trapped with a higher rate of interest (APR) on your credit card.
If you keep opening new low interest credit cards and shifting the money around, without paying off any of the original debt, the financial institutions could get worried about your ability to service the debt. This in turn can make them less likely to provide credit for you.
If you balance transfer too regularly, it can become harder to borrow money from other non credit card lenders like mortgages or personal loans.
On top of that, any incident such as late payment or going over your limit can trigger the banks to start charging you with a higher rate of interest.
Another thing to consider is the likely fact that the 0% balance transfer rate may only apply to the balance transfer i.e. not any other money you spend on the account. There are some exceptions to this, such as the Virgin credit card.
You should also be conscious of the fact that if you have any money on the card apart from the 0% balance transfer, it is more than likely that any payments you make on the card will be applied to that, rather than the 0% balance transfer amount, giving banks the opportunity to charge you for teh intial transfer.
As in all these things, Credit Card balance transfer is still a good idea, you just need to consider the risks when you’re doing and always make your payments on time.
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Comparison of Top 10 Credit Card Offers
| Credit Card | Card Details | Interest Rate | Cash Advance Rate | Balance Transfer Rate | Annual fee | Interest free days | ||
|---|---|---|---|---|---|---|---|---|
 Halifax All in One Credit Card |
The Halifax All in One credit card offers a great introductory rate, and is perfect for saving you money now as well as in the future. | 15.9% APR | 27.95% p.a. (variable) | 0% for 9 months | No Annual Fee | 59 Days interest free |
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 Virgin Credit Card |
As well as a great rate, the Virgin Credit Card comes with:
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16.6% APR (variable) | 27.9% p.a. (variable) | 0% for 16 Months (2.98% fee on balance transfers) | No Annual Fee | 50 days on card purchases |
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 Capital One Classic Visa |
This card is designed for people with bad credit ratings, this is why the rate is quite high. |
Typical 34.9% APR variable | 34.9% APR | 34.9% APR | No Annual Fee | 56 days for purchases. 0 days for balance transfers and cash. |
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As well as earning Flying Club miles which you can spend on brilliant rewards like flights, upgrades, car hire and more, a Virgin Atlantic Credit Card gives you up to 46 days interest free on card purchases. |
17.9% APR typical rate | 20.9% p.a. (variable) | 0% for 6 months (2% handling fee) | No Annual Fee | Up to 46 days on card purchases only. |
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The Virgin Prepaid MasterCard from Virgin Money is a prepaid Mastercard that you can add funds to, and use these funds for normal purchases. |
N/A | N/A | N/A | N/A | N/A |
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5% cashback on purchases in your first three months (up to £4,000 of spend). Thereafter, earn 0.5% on the first £3,500, 1% on £3,501 to £10,000, and 1.5% after £10,001. |
18.9% p.a. | 27.9% p.a. | 18.9% p.a | No Annual Fee | 56 days for purchases. 0 days for balance transfers and cash. |
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Vanquis Visa Card is designed for people with no credit history or who have previously had bad debt. Representative 39.9% APR (variable) |
Representative 39.9% APR (variable) | 39.9% | N/A | No Annual Fee | Up to 56 days on card purchases only |
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The award winning prepaid card with no credit check or bank account needed. | Funds in your Account will not earn interest | Prepaid only - N/A | Prepaid only - N/A | £59.40 p.a. (£4.95/month) | Prepaid only - N/A |
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