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When is 0% not really 0%? Dom Littlewood knows...he's found out even the best 0% credit card balance transfer offers, can still end up costing you.
You see, although the offer says 0% on balances transferred, 0% doesn't necessarily apply to purchases and cash withdrawls. And if your credit card provider uses a negative order of payment or negative payment hierarchy, then clearing your debts is going to be that much more harder.
To clear your balance as fast as possible, you might be hoping the debt with the highest interest rate is paid off first. But with negative payment hierarchy the debt with the lowest interest rate (i.e 0%) is paid off first - leaving it much harder to clear the most expensive parts of your balance. And some higher rates can be as much as 17%.
Some cards offer positive order of payment where you're paying off the debt charged at the highest interest rate first, before the lower rate. But to be sure you need to either ask or read the small print to find out.
Do you know what repayment hierarchy your credit card is on? Have you read the small print?
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I recently transfered a balance to a halifax one card.
when I received the statement I noticed that interest had been added, I phoned them as I had not made any purchases,
I was told that I had a greed to take the insurance cover and that was considered a purchase therefore my whole balance became subject to interest.
I couldn't recal agreeing to insurance and told them I didn't want this cover, I never normally agree to these as I think they are a con. But they wouldn't remove it.
All I could do was transfer the balance again!
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I have never fallen for this card balance transfer I prefer to keep my spending on my credit card low so I can pay it all off each month its called money management.
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I think that the credit card companies need a good shake up. The interest rates they charge are well out of proportion to bank rates now. The store cards are even worse. Once you get into the hands of these greedy companies they have you for life. Two stores spring to mind. Whenever I shop in M&S or Debenhams , I always get asked of I would like their card. I always decline. Their interest rates are phenominal and they encourage you by giving extra discount at Debenhams. Very naughty ploy!!!
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Took the advice given in a money advice programme that Adrian used to host (sorry can't remember the name of it) and transfer my balance to a new credit card when the interest free period is up - I always say I don't want the insurance but it does not stop them adding it to my account and I always end up making a phone call to tell them off and demand a refund and get all interest charges deducted.
The thing that also gets hidden in the small print is that they charge you a percentage of the amount you wish to transfer so they get extra money from you anyway.
Caz - Evesham.
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