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Credit card companies charge customers 51 per cent interest over £31 billion each month. According to TotallyMoney, this figure has increased by 9.4 percent in the past 12 months, which means more people are paying interest. However, there are ways people can “stop paying interest” for a period of time, and this can help them make sizable savings.
Alastair Douglas, CEO of TotallyMoney says: “For a small fee (two to four percent of the amount transferred), customers can switch their balance to another card, and stop paying interest for a set period of time.
“While the best offers are often reserved for those with good credit history, there are still options available for those who don’t.”
Taking the average £2,542 interest-bearing credit card balance, Mr Douglas says customers with good credit scores can save £1,218 by transferring to a market-leading 31-month zero percent card.
For the same balance, people with a lower score can save £598 in interest on a 16-month card, while those who qualify for a nine-month card can save up to £303.
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By not spending money on interest payments, people can pay down debt more quickly, cover other expenses, or put it away for savings. In addition, keeping payments and reducing credit use can have a positive impact on a person’s credit score.
Mr Douglas said: “Before clicking apply, check the terms and conditions. These cards usually come with a small transfer fee, require you to complete the transaction within 90 days, and only allow you to transfer up to 90 percent of the limit on offer.
Those looking to carry a balance on a credit card that doesn’t have a promotional offer should do the math and see if a zero percent transfer is best in their interests.
Mr Douglas said: “There are a variety of options available designed to save you money, even if you don’t have a perfect credit score, shop around because you may still find something that fits your needs.”
Mr Douglas said to take the guesswork out of it, people should always check their eligibility before applying, and look for products with guaranteed offers.
He said: “That way you will know your chances of being accepted, and what you will receive if you do. People who check their credit reports have better credit scores – and it’s free – so make sure you do that.
“Banks use this data when deciding whether or not to lend to you, and by making sure everything is up to date, you will be in a better position to receive the right offer.”
However, before carrying out a credit check, it is important to differentiate between soft credit checks and hard credit checks, as the latter can worsen credit scores.
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Mr Douglas said: “Having your name on the electoral roll can help lenders check your address and identity. Plus, if you’ve been at the same address for a long time, it can make you appear more settled and stable.
“It is important to show that you can manage credit accounts. This means never missing a payment, and whenever possible you should always try to pay more than the minimum amount.”
He added: “Try to use less than 25 percent of your available credit in each of your accounts. This can show the lender that you are less dependent on them and that you are in control of your finances.”
