Finance Tips

0% balance transfer credit cards are a type of interest free credit card which allow you to pay zero interest on your debt for a fixed period of time, meaning it can be a cheap way to pay off debts if you can navigate the system to your benefit. However, while these credit cards can be very useful in certain circumstances, if you’re not careful they could equally lose you money. Here are the dos and don’ts of 0% balance transfer cards.

DO: Compare offers

Different providers offer different terms on their 0% balance transfer credit cards. Shop around for longer interest free repayment periods, lower interest rates once the offer is over and lower transfer fees where possible. It might not seem important right now, since you will not be paying any interest at first, but these factors could save you hundreds of pounds later on if you find yourself unable to pay off the balance within the promotional interest free period.

DON’T: Ignore transfer fees

Transfer fees are now standard on the majority of 0% balance transfer cards. This is because providers want to avoid customers taking up the interest free offer, failing to pay off their debt within the promotional and simply switching card supplier each time the interest free offer expires. Balance transfer fees vary from card to card but are usually around 2.5% to 3% of the total balance owed. Look for the lowest balance transfer fees possible when comparing credit cards.

DO: Be realistic

Be completely honest with yourself about how long it will take you to pay off your debt. If you know you can realistically pay it off within the interest free period, it could well be a good idea. If you’re not sure then you need to be wary of 0% balance transfer credit cards – leaving your debt for longer than the interest free period could costs you high interest repayments, the average interest on credit cards being around 17.5% in the UK. If you run out of time and choose to move your debt, meanwhile, you may be met with the alternative cost of the card’s transfer fee. If you don’t really know how long it will take to pay off your debts, a lifetime balance credit card might be more appropriate.

DON’T: Make purchases

Unless your 0% balance transfer credit card terms specify that the card is 0% on purchases, the likelihood is that you will have to pay very high interest on any purchases you make with the card. Even if the card does specify ’0% on purchases’, many customers don’t fully understand the conditions attached to this. Certain purchases could still carry high interest rates, as could instant cash transactions, such as cash withdrawals, so people often inadvertently trigger these expenses simply due to not understanding the terms and conditions attached. Also, making any purchases will increase the overall debt and make it harder to pay off the balance before the end of the promotional interest free period.

Certain student loans require a cosigner if the student or parent soliciting a loan does not meet minimum credit requirements to receive a loan. This applies to both private and some federal loans; the PLUS loans for graduate students, which can be received by parents or students, have minimum credit requirements, and in either case, parent or student can use a cosigner with good credit to sign on the loan. Getting student loans without a cosigner is possible, and being a cosigner is a significant risk, as the cosigner will be responsible for any debt the borrower does not pay.

The Stafford federal loans do not require a credit check or cosigner, and should be the first step in your search for college funding. If you do not have any resource for receiving family assistance for attending college, you may qualify for financial aid, subsidized Stafford loans, or the subsidized Perkins loan, which is the hardest loan to attain but the best offer available.

Federal PLUS loans, on the other hand, do require a cosigner if you do not meet minimum credit requirements. These credit requirements are standardized and are not excessive, and this loan is only available to graduate students, so you may want to take advantage of your time as an undergraduate to use a credit card responsibly and build up your credit rating so you can later apply for a PLUS loan. This will also help you get better rates on private loans, which will really make a difference in expensive graduate programs.

If you have no one who could act as a cosigner or just want to go it alone, your loan, even with a low credit rating, is a valuable asset to a financial institution and they will compete for your business. The risk of loaning to students is comparatively low at the moment, because it is nearly impossible to absolve this student debts through bankruptcy.

If you have a good credit rating, lenders will offer you Prime interest rates on your student loans; if you have no credit or bad credit, they may ask that you have a cosigner. Ask at several different financial institutions what they can do to accommodate your education finance needs. Usually bad credit loans are given at a higher interest rate and/or with extra fees, but you can lower this number by calling different lenders and demanding the best possible rate. If your credit is very bad, you may have to take some time off to work and increase your credit score, and if you can keep working while you’re at school, this can be a deciding factor in receiving a private loan as well.

While many financial institutions would prefer one, it is very possible to get student loans without a cosigner.

Even if you have a good income, you could be facing escalating credit card debt. There are times when this can not be avoided. However, you can get it paid off without too much hassle. A 0 apr on balance transfers is possible.

Though it should not be considered lightly, using a 0 interest balance transfer, which is paying off the amount owed on one credit card with a different credit card, can be something to take into consideration. Up to recently a balance transfer could be done without a balance fee. Now credit card companies are charging as much as 3%.

0 interest balance transfers are normally for 6-12 months. A high balance can result in having years of credit card debt for many people. Once introductory rates expire, interest rates can go rather high in the next few years. It is not unusual for people to discover that they are now paying up to 25% on the original balance.

If you have credit cards with high interest rates, finding a credit card company that has lower fixed rates is something you may want to take into consideration. By transferring high interest credit card balances to a card with lower interest rates, you can get those debts paid off at once and have a monthly payment that is lower.

To determine if this is a good solution for you, get a calculator and all the relevant paperwork and figure out what your monthly payments are each month with your current credit cards, being sure to estimate any interest rate hikes. Then calculate what your payments would be after transferring those balances to a o interest rate credit card. These calculations may be a bit time consuming but can help you find the best solution.

Be cautious when looking at credit card offers. Some companies are known to offer easy o balance transfers with generous grace periods and extremely low payments as a come-on to get new customers. If your debt is nearly paid off or if you know you will be getting a large amount of money before the grace period is over, you might think about this. But be sure you know whether the payment will go up and by how much once the grace period expires.

Another thing to check into are any penalties, withdrawal fees or termination of service fees you might have to pay. This needs to be calculated into the picture, too.

Knowing everything you possibly can about your credit card accounts is the most useful weapon you can possess. You need to know where all your money is going each month. Call the credit card company you are thinking transferring balances to and consult with one of their representatives before you make a commitment so you know whether it is the best thing to do or not. A good representative will assist you in mapping out your payments to see how this will work out for you in the long run.

A balance transfer can be a way to make getting out of debt faster. But you need to be mindful of everything involved in the process and keep track of your rates every month. If this is manageable for you, a balance transfer could be a good way for you to get your debts paid off and become financially solvent again. Hopefully a no balance fee will be available again in the not to distant future.

Often, students do not have credit records. This makes it difficult for them to obtain credit cards. In addition, if they are able to obtain, the credit limit is low or interest rates charged are high. At such times, prepaid student credit card is the best option, as it provides flexibility of a credit card and avoids accumulating debts at the same time.

No credit checks or monthly installments are required to obtain such type of credit card. The amount transferred to a prepaid credit card determines the spending limit. You can obtain such a credit card online or from a financial institution.

Uses and Benefits:

You can use this credit card wherever normal credit cards are accepted. If credit balance on the card is low, students can refill them at any time. Methods to refill these cards are through cash or check. Some card issuers also accept automatic account loading on a monthly basis.

With normal credit cards, you are not aware of the amount available on the card. Sometimes, dealers may take a small amount first and charge the full amount later. As a result, an overlimit fee is charged, which results in negative balance.

Hence, students need to monitor their credit balance and transactions on their credit cards, as they have to pay the negative balance. This also helps them to beware about financial stability and budgeting at a young age.

Benefits:

Some prepaid student credit cards allow students to build their credit history. You can apply for such a prepaid credit card, if you have a social security number. Social security number plays an important role in applying for this type of credit card. As a result, they are reported to credit bureau agencies. You need to maintain a positive credit history by keeping the card active and avoiding negative balances. Good credit records help students to get credit cards with lower rate of interest and in getting finances such as loans and mortgages.

Prepaid student cards provide students the flexibility of using credit cards without worrying about card debts. Students learn to maintain economic constancy and develop positive credit history with the help of these cards.

These credit cards function in the same manner as normal credit cards do. You can buy goods and services from different locations with these cards. They look and act as a normal card and are very similar to debit cards. You have to put some money in a pre-determined bank account to make use of these cards. If you fail to put money on the card, you will not be able to use the card.

Other Points To Remember:

Minors, who are unable to obtain cards, can get these types of credit cards. Usually, teenagers use prepaid student credit cards the most to build credit history, while studying.

Some disadvantages of these cards are:

1. There is a monthly convenience fee.
2. You have to pay an interest fee.
3. You do not get a credit.
5. They make it difficult to shop with a low interest rate.