A lot of people are starting to manage their credit card balances by taking up special deals and offers from new credit card providers. These deals give them ways to freeze or cut back on the interest they will have to pay so they have more time to sort out their finances and will have to pay back less interest.
What to look for in a credit card offer
The key factor with any credit card is the Annual Percentage Rate (APR). This is the percentage of interest that the card will charge you on a credit card balance. It doesn't apply if you pay off your card in full every month as it will only be levied when you owe the card provider money month on month.
Many credit card offers, therefore, will help you cut or freeze this interest rate. Some deals simply charge 0% or reduced interest rates on spending for a specific period. Other offers, such as balance transfers, give the consumer breathing space to pay off their balance without too much (or any) interest being added to their borrowings. So, for example, if a consumer switches an outstanding card balance to a new card company that is offering 0% interest on a balance transfer for six months then no more interest will be added to their balance whilst the deal is running. Some deals here also give the same rates on new spending. There are various kinds of offers here and they will all last for varying times (for example, three, six, nine or twelve months).
Things to remember
Not all offers are free here -- for example, you will have to pay a fee to set up a balance transfer. This will usually be charged as a percentage of the sum to be switched. It's also important to think about the APR that you will be charged once the deal has finished. It is important to find a low APR especially if you won't be able to repay your whole balance during the deal to avoid high interest charges later.
Credit card spending as a whole can be tricky. It is easy and quick to use a credit card but do remember that this is not your money -- you are borrowing it from the card company who will add interest to the money you spend if you do not pay off your balance in full. This interest can soon mount up.
When considering applying for a new card to take advantage of an introductory offer, think carefully about how many applications you may have made in recent times. Too many applications can have a significant negative effect on your personal credit score. All financial institutions will access your credit history when assessing an application. They will then apply their own internal scoring criteria in deciding whether to accept or decline your application. One of the many factors in such a scoring exercise is the number of applications you have made for new financial products. Other factors of course include your payment history -- always ensure that you make payments, albeit in some cases the minimum payment required, within the specified time frame. Nothing is more off-putting to a potential lender than one or more missed payments.
Conclusion
Many people use these offers and switch from deal to deal to manage their balances to best effect. Rates and offers vary widely so it is important that you compare like for like -- only use APR as a means of comparison and check the rates that will apply at the end of any deal as some of these can be punative. Do try to avoid harming your credit score if doing this as this can stop you getting approval for new financial products in the future. For example, always make sure to make a payment in time every month and try to avoid applying for a lot of credit cards in a short period of time as this makes you look like a high risk to any lender.
Author Resource:-
Steve Wilson is a freelance researcher and writer specialising in consumer, finance and business subjects.
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