Five ways to get rid of your credit card debt
1. Check your credit record
If you have a history of late payments or a lot of existing debt then you may find you're turned down for a 0% balance transfer card, so check your credit record before you apply. The main rating agencies include, Experian, Equifax or CallCredit.
2. Improve your credit rating
If you have been refused a credit card, do not simply apply elsewhere as this could damage your credit rating further. You can improve your credit rating by ensuring you're on the electoral roll, reducing your level of debt elsewhere and making sure there are no mistakes on your report.
3. Look around
Most 0% cards require you to pay a balance transfer fee, often around the 3% mark. In some cases it might be worth looking for a credit card with a low rate of interest and no balance transfer fee. Although you will be charged interest, it could be worth it in the long run especially if you think you'll need a while to pay off the balance.
4. Think before you buy
Never use a 0% balance transfer card for new spending as the majority of credit card providers use your monthly payments to pay off the cheapest balances (that is, your 0% balance) first - leaving the more expensive debt to rack up interest.
5. Keep on top of your repayments
Make sure you clear your balance within the interest-free period, or you face paying interest of around 18% APR. Also, it's vital you don't miss any payments - if you do it will often render any 0% void and you will start paying interest on your debt.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
Moving money from one account to another, whether switching bank accounts or more likely transferring the outstanding balance on your credit card to another card that charges a lower – or 0% – rate of interest. Some card providers may charge a transfer fee that can be a percentage of the balance transferred.
This is used to compare interest rates for borrowing. It is the total (or “gross”) interest you’ll pay over the life of a loan, including charges and fees. For credit cards where interest is charged at more frequent intervals, the APR includes a “compounding” effect (paying interest on interest). So for a credit card charging 2% interest a month (equating to 24% a year), the APR would actually be 26.82%.