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Christmas is always a time of indulgence, and treating family and friends to gifts. With the New Year sales and people buying up goods before the VAT increase, many consumer s are now left with a few debts hanging over their heads. However it appears that more and more are turning to balance transfer credits cards instead of loans, to help take the sting out of their January bank statements. Balance transfer cards allow you to repay debts on other credit or store cards. This means you now owe money to the new card instead and hopefully at a cheaper rate too. Some cards entice you with 0pc offer for the first few months or offer low rates for the endurance of the balance. This may sound a good deal, but always make sure you read the small print. This can include charges for ‘new spending’, which can be interest free for a couple of months only and then spring to 18.9% thereafter. So it is worth trying to resist spending on new balance transfer cards. Also watch out for interest hikes on the balance transfer itself as after the 0% deal ends, the balance rate transfer can jump to around 16.9 – 18.9% depending on the provider. But which in the long run would be better for your pocket really depends on the amount you have to repay, wish to borrow and how quickly you can repay it all back. Loans for under £5000 tend to be rather high, and are currently in the region of 18.7% for £1000-£2000, to 12.9% for £3000-£4999, for 1-3 year loans. Compare this to credit cards, of which some at the moment are offering 16 months interest free, with an average transfer fee of 2.9pc (min £3). For larger sums of cash (over £5000) you are probably better off going for a bank loan as these can offer you rates of 8.7% for £5000-£7500 and approximately 7.5% for £7500-£15000 (again rates vary per provider). If you are just paying off the Christmas bill, then simply transferring your balance onto a new card could work. And if you find yourself struggling to pay it off before the 0% deals ends then you could always shift it to another new card. However, be warned - don’t rely on this to always help you out, as if you have previously had a card from a provider, it is unlikely you will get another from the same company for some time. As with anything, always shop around for the best deals. There are many credit card providers, banks and building societies all offering different deals and incentives. It is important to pick the right one for you and with some careful research and a proactive approach; you can manage and take back control of your finances. With Valentines Day approaching, now is the time to look after your finances so you can buy beautiful Valentines day gifts for that special someone.
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