Credit card balance transfers - best offers UK

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If you have run up a UK credit card bill and are struggling to clear the balance, the best offer may be to move your debt to another card provider. This practice is known as a credit card balance transfer.

When a credit card debt starts to get out of hand, most people will still try to pay off the 'minimum amount' each month. The minimum amount is calculated by the credit card company, and is usually between three percent and five percent of the total balance, but always a minimum of £5. Failure to repay the minimum amount will result in a charge, usually around £20 or £30, and you will not be able to use your card until a payment has been made. If you repeatedly fail to make any payments, you could face court proceedings.

If you are able to pay the minimum amount each month, you may succeed in staying out of trouble with the credit card company, but you will be getting yourself into deeper and deeper water in terms of debt. To give you some idea of how this happens, have a look at the table below. It shows how a relatively small balance of £100 can, with time, spiral out of control and result in a much larger debt. The example is calculated based on a credit card with an APR (Annual Percentage Rate) of 20%.

You can see that, even after just six months the cardholder has contributed £30 towards this debt, but still owes £78.37. If the debt continues to be repaid in this way, it would actually take over two years to repay the original sum of £100, and would have cost £120.28 in total. That is over a fifth of the balance amount wasted on interest. Imagine the financial cost of paying back a debt of thousands of pounds using this method of repayment.

The best way to avoid excessive interest charges is to transfer your card balance from your current credit card to a creditor that is offering a better deal, such as a zero percent introductory offer on balance transfers, or a low interest rate for the life of the balance. These cards will allow you to repay more of the debt each month, because less is being used to pay back the interest.

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