Golden Rules Of Balance Transfers

1. Don't use your new credit card for purchases until you have paid off the balance transfer amount. If you do, you will start being charged interest on your new purchases at a higher rate. There are some exceptions *(see below).

2. Use balance transfers as a way of reducing the amount you owe, not as a way to procrastinate on your debt repayments.

3. Try to repay the interest you have saved in addition to the monthly minimum payment.

4. Consider how your balance transfer fits in to an overall financial plan.

5. Make sure you fully understand the terms and conditions of each offer.

6. Mark the date in your diary when the low interest rate expires.

7. Have an action plan to pay off or consolidate your balance by this date.

8. Have a clear figure in mind of the amount you want your credit card balance to be at the offer-expiry date, if you are unable to clear it in full.

9. Write this amount down next to the date in your diary, and commit to it.

10. Consider how close to "Debt Freedom Day" you will be at the end of the six-month balance transfer period.

11. Think about other actions you can take (review mortgage, cut out one luxury item each week, switch energy and telephone suppliers, etc.) to help reduce the amount you owe.

12. If you must make purchases on credit card, it is usually better to use your old credit card. Make sure that you do not let the balance on this go back up to previous levels.

13. Most credit card companies are likely to offer Payment Protection Insurance. Just like extended warranties on electronic goods, these offer big profits to the credit card companies, so card issuers are eager for people to sign up. We recommend that you have a serious think about whether you really need this insurance. Do the costs of the insurance really offer value for money?

14. You may also be offered a preferential-rate loan after having your credit card for a certain amount of time. Always shop around first before accepting this kind of offer.  

* Exceptions for Rule 1:

- The 0% offer applies on purchases as well (although you should still proceed with caution here).

- You are using an offer which stipulates that you must spend a minimum amount each month.

- Your card issuer repays the higher interest balance first. As far as we know, only Nationwide do this at present.