My wife ran up a large amount of credit card debt over the past ten years. I have estimated that without interest it will take 9 - 10 years to clear the total debt completely. We have agreements with the majority of credit card companies to pay off less than the minimum monthly payment and the debt does reduce each month. One credit card company has written to us asking if we would like to take advantage of an offer to rewrite the account with a 0% APR. We have asked for further details of the offer. Should we be suspicious of this offer? What should we be looking for in the small print of the agreement? Any advice would be gratefully accepted
Masses of people will make use of a 0% transfer, myself included. But as Eric Jones has said, make sure you can afford the minimum payments - find out what they are beforehand. Make sure you set up a direct debit to pay off the minimum payment so that you don't mess it up by forgetting. Because if you do, the 0% is cancelled. And never use this card for anything. If you do, the monthly payments come off the 0% bit, so you start running up interest on the bill you've just incurred.
Thanks Rob and Eric that's sound advice I will certainly be looking at the small print. My gut reaction was to stick with the agreement we currently have. Cheers - Steve
If I were in your position, I would be actively seeking out 0% credit cards to transfer the balance to. If you can avoid paying interest you will be able to pay off the debt much quicker, especially with the high rates you get on most credit cards.
Obviously, you need to check the small print carefully and be sure that you can afford the payments, but there are a lot of genuine good deals around at the moment. As others have said, you just need to be careful. Make sure you note down when the 0% deal ends, and start looking for a new 0% card to transfer the balance to well before that date.
I have a couple of other suggestions. I am no expert, and obviously I don't know the details of your situation, so they may be bad suggestions:
1) Do you own your house? If you do, have you considered remortgaging to pay off some of your credit card debt? The interest rates on mortgages are often much lower than credit cards, and you can spread the repayments over a very long time. The downside is that you could loose your house if you don't keep up the repayments. Also see what rate you are paying and see if you can get a better deal. Just check the terms and conditions of your current mortgage as well as the one you are looking at moving to.
2) Have you considered a loan to pay off the credit cards? The interest rates on loans are often much lower than credit cards (though usually not as low as mortgages, and obviously not as low as 0% offers). If you are prepared to spend time shopping around for a good rate you could save yourself some money.
I think the OP had financial problems which might preclude him/her from obtaining 0% credit card and cheap Personal loans.If they missed one minimum payment then the whole thing would collapse. Also it is generally not a good idea to switch unsecured lending to secured via mortgage - if you do not keep up repayments you could end up homeless!
Whyever not? If that were true, a corollary would be that it is good to "switch secured lending to unsecured" - ie get lots of loans & credit cards and use them to pay off your mortgage. Do you recommend that?
"Eric Jones" wrote
But if you *do* keep them up, you will end up paying less interest!
And anyway, even if you managed to switch all your mortgage to unsecured loans & credit cards, then you might still end up with the loan/credit card company getting a charge put on your home if you don't pay ... and in the meantime you'd be paying lots & lots of interest! ...
Yes, the OP must carefully consider the risks and I did say that in my original post. However the difference in monthly payments is considerable. For example, consider the monthly payments on a debt
20,000 pounds:
127.52 pounds a month over 25 years on a Nationwide base rate mortgage
220.94 pounds a month over 10 years on a Nationwide base rate mortgage
400 pounds a month with the minimum 2% payment on a credit card
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