Don’t get burnt

DON’T WAIT to deal with debt — costs add up and the situation festers. The first step is not to borrow any more, however, just as important is how you deal with the existing debt. So here are my credit card debt-busters: If you have costly existing credit cards and a decent credit score, get a new balance transfer card. Quite simply, this pays off the debts on your old card(s), so you owe it the money instead, but at a cheaper rate. As the rate is lower, more of your repayments go towards clearing the debt, rather than just servicing the interest. The three cards I’d pick right now are Barclaycard, which offers the longest 0% deal — two years with a one-off 3.2% fee of the amount transferred. If you can pay off much quicker, the lowest-fee deal is 1% with NatWest, but you only get 13 months interest free. In between the two is Lloyds at 21 months 0%, but with a relatively decent 1.5% fee. See www.moneysavingexpert.com/balancetransfers. If you need longer to repay, or are uncertain about repaying, consider the MBNA Rate for Life card for safety. For a one-off fee of 1.5%, new cardholders can shift debts at 5.9% until all the debt is repaid. This is a corking deal to provide long-term low rates for people who don’t want to repeatedly shift cards. Most balance transfer deals require you to have a decent credit score. However, currently one card is easier to get, even for those who have been rejected in the past. The Capital One Balance+ card offers 0% on shifted debt until July, for a one-off 3% fee. You still must pass a credit score, yet unusually, it doesn’t auto-exclude those with past CCJs/defaults. After July, it is a huge 34.9% rep APR, so do plan to repay what you borrow by then.

If you won’t be able to do that, compare this 34.9% rate to your existing cards. If Capital One is a lot higher, leave room to “balance transfer” back any debt not cleared in order to save. If you doubt you will get accepted for new plastic with a cheap rate, or want to use existing credit more efficiently, there is another way. Some cards let cardholders with room on their credit limit shift other debts to them cheaply. Barclaycard, for example, offer 6.9% for life with a one-off fee of 3%. Find out which cards allow it, list down the rates and available credit limits, then move all your existing debts to where they are cheapest. See www.moneysavingexpert. com/creditcardshuffle for full help. If you are applying, it is crucial to follow the three golden rules:

a) Repay at least the set monthly minimum, or you can lose good rates.