Winning The Transfer Game
We're not talking about Wayne Rooney or other footballers; we want to show you how to save money with low-rate and zero-interest balance transfers!
With just over five weeks to go until England's first World Cup match on 9 June, Wayne Rooney's injury dominates the news headlines. Indeed, a quick search revealed 2.8m hits for Wayne Rooney on Google, so perhaps it should be renamed Roogle?Although Rooney's £27m transfer to Manchester United in 2004 made him the most expensive teenage transfer in football history, I shall take my mind off worrying about the England team by focusing on a different kind of transfer: balance transfers.By making use of balance transfers, you can slash the cost of your credit- and store-card debts -- even reducing your interest bill to zero. Quite simply, you open a 0% on balance transfers credit card and then instruct your new card issuer to pay off your other debts, thus shifting these balances onto your new card.Most card issuers will allow you to make balance-transfer requests online, over the phone, or when you open your new account. Furthermore, some card issuers will accept other debts, such as overdrafts or personal loans: all you need to provide is a sort code, account number and the transfer amount, and you're away!So, in theory, it's simple: find the card with the longest initial 0% deal and transfer all of your debts to it, right? Aha, but, as with all things financial, the Devil's in the detail. These three tips will help you to be a winner in the transfer market:1. Transfer fees: capped or uncapped?Just as Man Utd had to stump up a seven-figure fee to Rooney's agent, many card issuers charge you a fee for balance transfers. Indeed, it's tough to find a card which doesn't charge a transfer fee for an introductory 0% deal lasting more than six months. A typical fee would be, say, 2% of the value of each transfer, with a minimum charge of £2 and a maximum charge of £50.However, some crafty card issuers don't impose a ceiling on their transfer fees, so a transfer of, say, £7,500 could mean stumping up a transfer fee of £150+. Given that many balance transfers are made via automated payments (which cost pence, not pounds), and processing costs aren't related to the size of transfers, I view uncapped transfer fees as unfair. Avoid them if you can: look out for capped transfer fees, or be prepared to surf your debt between a string of six-month, no-fee 0% deals.2. Being refused creditAs I warned in this article earlier today, card issuers are tightening up their lending criteria, which is making it harder for people with borderline credit scores to open new accounts. If you find yourself in this situation, try this trick: call your existing card issuer, tell it that you've been offered a transfer rate of, say, 5% APR by one of its rivals, then ask it what it can do to keep your business. With lenders cutting each other's throats to win more custom, this little white lie can be a very powerful tool!Alternatively, if your new card issuer offers you an inadequate credit limit, then call and ask for your limit to be increased, as some issuers will automatically match the highest limit provided by your existing cards.3. Lovely lifetime dealsIf your credit rating isn't up to it, or you can't be bothered to be a card tart (hopping from one 0% deal to another), then you should go for an ultra-low lifetime balance transfer deal. Best Buy lifetime balance transfers with annual interest rates under 6% include the American Express British Airways Credit Card (4.9%), American Express Nectar Credit Card (5.9%) and the Sainsbury's Bank Platinum Credit Card (5.94%), none of which charge transfer fees.Finally, your goal as a rate tart is to pay as little as you can in interest and fees. Hence, just say no to card protection plans, rip-off payment protection insurance (which can add 10% a year to the cost of your debt!) and other add-ons. Also, 0% transfer cards are for transfers only, not for spending, so don't take them shopping (these are the best cards for shoppers). Keep it cheap and cheerful, please, if you want to be a winner!More: Check out our deck of delightful credit cards | Find Best Buy personal loans here.