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Zero Interest Credit Cards Explained

Zero per cent cards and Zero per cent balance transfer offers are good ways to reduce the burden of debt. With a zero per cent interest rate card, obviously the big attraction is being able to borrow cash for free. This means you can finance that brand new flat screen for no charge whatsoever. You should be aware however that such deals are for a limited time only usually approximately six months, so you should pay off as much debt as possible before the offer expires. This means if you spend $3000 on a television, make sure it is paid off at the end of 6 months.

Zero per cent balance transfer deals in contrast allow you to pay off existing debt rather than racking up new debt that is free of charge. The basic principle of a zero per cent balance transfer is that the credit card company allows new customers to transfer outstanding balance onto the new credit card and charges the customer zero per cent on the balance transferred. In theory if you are disciplined, you can pay down debt for the duration of the offer period without incurring additional interest rate charges.

This sounds great, but you should remember that zero per cent deals are usually for a limited time only, so you need to be aware how long the offer is for and pay as much of the outstanding debt as possible before the offer period expires, otherwise the rate gets hiked and interest starts accruing and your debt will increase quickly. This is true for both zero per cent interest rate cards, and zero per cent balance transfer deals. Also be aware that there is typically a 3 per cent charge on balances transferred so if you do take up a balance transfers offer, it is not completely free of charge.

Latest Compare Credit Cards News from the comparedinkum Blog

New Report Suggests Many Australians Are Struggling With Credit Card Debt

A new report by ASIC has found that 18.5% of Australians are struggling with credit card debt. The outstanding credit card debt in Australia totals $45 billion with $31.7 billion of that incurring interest. ASIC Deputy Chair Perter Kell says the findings prove that credit cards can result in financial difficulties for many Australians. Other research suggests that one fifth of all cardholders in the country are in a long-term debt trap with 1 in 10 carrying credit card debt for over a decade. Continue reading

Australians Not Using Balance Transfer Cards Properly

Balance transfer cards are popular with Australians seeking to pay down their credit card debt because they come with an interest free period. That does sound good doesn’t it? Unfortunately, the reality is most Australians are seriously misusing these cards and its costing them a packet. According to RateSetter 44 per cent of Aussies who use these cards to try to pay down debt fail to do so within the interest free period because they are unable to resist the temptation of spending more. A further 12 per cent simply lack the discipline to make the monthly minimum payment. Continue reading

Common Balance Transfer Pitfalls

Balance transfer cards are useful because they allow credit card borrowers to consolidate their debt onto a single card that usually has a long interest free period. This means the borrower is able to pay off their debt without incurring additional interest rate charges. This does sound too good to be true doesn’t it? Well to some extent it is, there is a catch, lenders are increasingly tacking on fees to transfer a balance, which is usually some fraction of the balance being transferred. Continue reading

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