‘Do not multitask’ with credit cards
As a general rule of thumb, the same credit card should not be used for purchasing items and to transfer previous debts, it has been claimed.
While seeking out competitive credit card offers can prove to be an effective means of not only purchasing items but – through 0% balance transfers – also getting to grips with pre-existing debt, such products need to be used with caution, it has been reported.
Indeed, while the majority of plastic products are useful for interest free credit cards purchases or 0% credit cards offers, Jane Baker highlights in a lovemoney.com article that using the same card for both things can prove to be a costly mistake.
The damage that using a single card for both balance transfer and purchasing can do the pocket, she claims, is particularly apparent in the Virgin Credit Card.
Although the credit card offers a 0% balance transfer deal – the longest period available on the market – its interest-free period on purchases lasts for just three months.
And while the Virgin Credit Card sees borrowers receive discounts on goods and services bought from elsewhere within the Virgin Group after the 12-week offer is up, the lovemoney.com writer states that doing so could be to borrowers’ detriment.
“If you keep spending on the card once the three months are up, taking advantage of all those juicy discounts, you’ll fall into the negative payment hierarchy,” Ms Baker claims.
However, it could be possible for borrowers to avoid being hit by negative payment hierarchy should they opt for the Halifax All In One credit card. This, she states, is because the product offers a nine-month 0% deal on both purchases and balance transfers.
She points out that consumers should look to ensure all debts owed are paid off by the time the offer expires, otherwise the typical interest rate of 15.9 per cent will be charged.
Those on the search for a 0% purchases card were also advised to consider the Tesco Clubcard Credit Card, which she points out will offer interest-free spending for 12 months on the basis that minimum monthly repayments are met.
Another to voice praise for the Tesco Clubcard was fellow lovemoney.com writer Serena Cowdy who recently claimed that the 0% purchases feature is “perfect for gradually paying back big expenses”.
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