Barclays have recently announced a new credit card which is going to make them very popular in the consumer credit market, especially with people who are looking to transfer a balance and pay off a debt. This is due to a half price sale which has just been announced by the bank which is going to mean that if you have borrowed £1000, you are going to just have to pay around 60p every month in order to make the repayments.
Barclays hopes that this new offer is going to bring them a great deal more customers although the deal is only going to be valid for a very short time, with the offer closing on 9 August. If you want to take advantage of this deal you are going to have to do so in the very near future.
However, it is not all good news because if you fail to pay off the balance within the 22 month period which you get an interest-free rate for, you are going to have to pay nearly 18 percent interest on any balance that remains. However, if you do manage to pay off the amounts before the time ends, then it’s going to be an exceptional credit card for you.
Since 2009 the Bank of England has set the interest rate at 0.5 percent however despite there being no change in this, the amount of money it costs to borrow on a credit card has been steadily increasing. This fee only applies if you spend on the credit card and then fail to to pay it off when the month ends, if you do manage to make the payments on a monthly basis, then you are not charged any interest.
The average rate charged on a credit card is currently around 18 percent, which means that if you have a debt of £1000 you are going to be charged £180 in interest each year alone. This makes credit card is a very expensive way to borrow money if you fail to make the payments on a monthly basis.
For this reason, credit cards which offer a zero percent balance transfer rate can save you a lot of money. They work because if you have an existing card balance you could be subject to a large amount of interest, but if you transfer this balance, then you will be able to take advantage of a zero percent rate.
These promotional rates are always for a limited amount of time, but they do give you up to 23 months in many cases to pay off the balance. This essentially means that you are borrowing the money for free for around two years, although don’t think of it as really free because if you fail to pay it off you’re going to be stung by heavy interest rates at the end of the promotional period.
However, it is not all a great deal because if you do want to transfer your balance to a credit card that has a zero percent rate you are typically going to have to pay a balance transfer charge. Generally this amount is set at about three percent for the total sum, which works out at £30 for every thousand pounds you move to the new credit card.
This is an important piece of information because it will let you work out how valuable the transfer will be. You should check to make sure that the interest-free period is long enough, and that it is actually financially worthwhile switching. There are also cards which offer lower balance transfer fees so it is worth investigating these.