Balance transfer advice
Making use of 0% balance transfer credit card deals can prove to be an effective way for people to get to grips with their debts, an industry commentator claims.
Paul Clitheroe, founding director of financial planning firm ipac and chief commentator for Money Magazine, states that when “used properly” these credit card deals can be very helpful, with 0% balance deals currently lasting for anywhere from four to six months.
In the Sunshine Coast Daily, he wrote out: "These can provide a useful window of opportunity to make a big dent into, or ideally, pay off your card debt without the burden of interest charges.”
Balance transfers, the financial expert asserts, are particularly useful for those with credit cards charging interest of 15 per cent or more.
Aussies considering this type of card are advised to pay off as much of the balance as possible within the specified 0% introductory period, as these deals tend to charge very high rates upon expiry.
These credit card users, he said, could easily find themselves "back where they first started, facing insurmountable, high interest debt".
Mr Clitheroe also warns against going on to make purchases on balance transferred credit cards as doing so is likely to see them be charged a higher amount of interest than that attached to the sum.
Furthermore, any debt payments are likely to be applied first and "only after that's been repaid will further repayments be applied to the new purchases sitting there racking up high interest debt".
Mr Clitheroe revealed that as the nation has an $33 billion outstanding credit card debt, many are struggling to keep their finances in order.
A Money-AU.com article recently claimed that while 0% balance transfer deals can be a useful tool for controlling finances, those looking to consider a card must be aware that they are likely to have to pay a transfer fee calculated as a small percentage of the amount transfered.
Filed under: Financial Advice