Should I Transfer Debt to Interest Free Credit Cards

If you have debt on a credit card right now, paying it off can take years and years and mean a lot of extra interest charges. Being buried in a pile of consumer debt can be overwhelming, and interest free credit cards are able to offer some relief. These cards are essentially a short term no interest loan, which allow you to pay off your principle balance much more quickly than high interest cards, and get back to being debt free. If you are considering transferring your current credit card debt to a card that offers zero percent interest, here are some things to keep in mind.

Limited Offers

If you transfer your current balance to a zero interest card, find out how long the period of no interest lasts. A no interest offer is rarely infinite – a time limit will be outlined in the full terms and conditions of your credit card agreement. In many cases, you are granted no interest for up to 27 months, but some cards may start to charge interest in about 15 months. Look for a card that has the longest no interest offer for balance transfers, especially if you anticipate that you could pay the debt off in full within the next two years.

Opening New Credit

While you can save on interest charges with a no interest card, you may want to consider what opening a new credit card will do to your credit score overall. Sometimes opening a new card has little to no negative impact on your score, especially if you have always paid on time and don’t have a huge amount of debt to your name. On the other hand, if you are in financial trouble then opening another line of credit can raise a red flag to future lenders. You may want to talk to a financial advisor or accountant before you open a no interest credit card if you plan on applying for a home mortgage or other major loan any time soon.

Ability to Transfer

Most credit cards will allow you to transfer debt from any other major credit card. However, if you want to transfer your debt from a department store credit card or other smaller lenders, you may not be able to transfer the balance to your new no interest card. Before you apply for the zero interest offer, find out if you will be able to transfer your debt to that card upon your approval. Otherwise, you just have a new credit card that might be tempting to use, and you aren’t helping to lower your interest on the debt you already have.

New Debt

After you transfer a high interest balance to a no interest card, you will have to make every effort not to incur new debt on the old card. Running up the old card again will bring up your debt to credit ratio, hurting your credit score, and will also negate a lot of the savings you earn by transferring the debt to a no interest offer. Easier said than done, you can often stop using a credit card for frivolous purchases by leaving it at home or locking it in a safe at a bank for emergency uses only. Also bear in mind that a credit card which offers you no interest on balance transfers may still charge interest on all new purchases. Don’t assume that you can enjoy a zero interest rate on things you buy unless your credit card offer explicitly says this is so.

Interest free credit cards can offer some temporary relief from your interest woes, especially if you are in a higher interest bracket. While these offers are only temporary, they can still mean hundreds of pounds in savings over the course of your debt. With a variety of low and no interest offers on the market, you should always compare and contrast the different credit card offers available to you before you apply. Applying for a series of credit card offers can lower your credit score significantly, decreasing your chances of being approved with each application. Instead, find one offer that suits your needs and apply for a second card only if absolutely necessary.