It’s hard to imagine that you earn money with a credit card if you manage your debt correctly, but ever since Egg got the jump on its competitors with the 0% Egg Card on Christmas Day in 2011, you can actually make money with credit cards – balance transfers is how you do it!
Of course, today nearly all of Egg Card’s competitors have had to follow the lead of Egg and not only offer introductory 0% interest rates, but also offer cardholders of other cards 0% interest periods if they agree to transfer their outstanding balances to the new card provider. As a result, if you take advantage of one card’s introductory offer of 0% for the duration of the offer and then transfer the balance to another card provider, and there are a lot of card issuers, you should be able to shuffle your debt management around so as to be able to make money with credit cards – balance transfers can save you a fortune.
Having said that, some credit card issuers have now cottoned on to the fact that holders have become debt management savvy and are transferring their balances around several difference providers to maximise their 0% interest period and have introduced certain counter measures; some of which include:
The Balance Transfer Fee
This is imposed if you transfer your credit card balance to another issuer. Currently balance transfer rates can be as high as 2% of the transfer balance, with a minimum fee of five pounds and a maximum fee of fifty pounds. So, although you won’t pay interest for the introductory period, you’ll have to pay a rather high fee (comparable to the interest you could have been charged) if you then try and transfer to another issuer. As such, watch out for this one before you agree to transfer your balance.
The 0% Offer
Credit card issuers are now murkying the water as to what the 0% applies to. With some card issuers the 0% applies to the balance transfer, but if you use your new card to purchase anything you’ll be charged the standard interest rate on that purchase from Day 1; others charge the standard interest rate from Day 1 on the balance transfer, but 0% on any new purchases during the promotional period; and still others will charge you 0% from Day 1 on both the balance transfer and new purchases made during the promotional period. Obviously, if possible, you really only want to be interested in the third type of promotion if you are serious about making money with credit cards due to your astute balance transfers!
Late Payment
the small print of a number of card issuers now states that if you miss a payment or make a late payment on your credit card you automatically forfeit your promotional rights!
So, to make money with credit cards – balance transfers must be timely and to friendly issuers. Lastly, keep an eye on your balance and repayment dates and if you have not yet managed to repay the balance in full, give yourself a month to get ready from your next 0% interest rate jump!
Personal debt in the UK has soared to record levels over the past few years. The Bank of England has recently confirmed that personal debt on a national level now amounts to more than £1,065 billion. Recent media reports suggest however that with low interest rates on loans that the UK public are becoming increasingly comfortable (and able) to manage high levels of debt. These reports have a good body of evidence behind them too, not least the fact that in 2004 the average age of outright homeownership fell to a record low, showing that people are paying off their home loans faster than ever before!