Playing your cards right

Letterboxes become dangerous at this time in January, and not just due to trapped fingers. Mail takes on a demonic hue for many awaiting credit card statements with Christmas’ spending on to land on the doormat. So if your plastic has a festive hangover, don’t ignore it, it’s time to sort it.

There are three key rule to sorting your existing debts: Stop borrowing more. Cut the interest rate. This means your repayments clear the actual debt rather than just profit the lender.

3. If you’ve more than one debt, prioritise repaying the one with the highest interest rate first – as it’s growing fastest – and just pay the minimums on everything else.

This is where you get a new card(s) that repays debts on existing credit or store cards for you, so you shift the debt and owe it, but at no interest cost. And there’s another ‘rule of three’ here to get the right card.

Don’t apply willy-nilly, first see what you’ll be accepted for. When you apply for a credit card they do a credit check. So those in most need of cutting their existing debt costs tend to be those who struggle most to be accepted.

Worse still just applying for a card marks your credit file. To help, use an eligibility calculator first, e.g. www. moneysavingexpert.com/ BTeligibility.

Go for the card with the lowest fee in the time you need. Most balance transfer cards charge a one-off fee on the amount of debt transferred up to 3%.

In general the longer the 0% period the higher the fee, so you should aim for the card with the lowest fee but ensuring the 0% period is long enough. So calculate how long you think you’ll take to clear the debt, add a bit for safety, then pick the lowest fee within that time. If you’re not sure play long and go safe.

The longest current 0% card is www.barclaycard. co.uk at ‘up to’ 38 months 0% with a 1.4% fee (19.9% rep APR after). The longest fee-free card is www.halifax. co.uk at ‘up to’ 29 months 0% (19.9% rep APR after). Full best buys at www.mse.me/ balancetransfers.

Watch for the ‘up to’ cards. Depending on credit score, some who are accepted will get a shorter 0%, but there is no way to know this beforehand.

However, in general if you do an eligibility check and the only cards showing up that you have a decent chance are ‘up to’s’ then you’re likely to get a shorter 0% with all of them.

The longest non-up to 0% card is www.sainsburysbank.co.uk at 36 months 0% with a 2.89% fee – so if accepted that’s what you get and it also offers a nonup to fee-free option for 28 months 0% (both are 18.9% rep APR after).

Getting the right card’s only half the job, once you’ve got it you need to ensure you use it the right way.

a) Always clear the debt on the card or transfer again before the 0% ends or you pay the high APR.

b) Never miss the minimum monthly repayment or you can lose the 0%.

c) Don’t spend or withdraw cash on the card. It usually isn’t at the cheap rate.

d) You must usually do the transfer quickly, most cards limits are 60 – 90 days to get the 0%.