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One of the biggest credit card trends in recent years has been the use of a 0% card to do a balance transfer.”

Buy yourself some time

Even though the credit card market has changed since the first 0% cards were introduced, they are still a popular way to manage your money.

One of the biggest credit card trends in recent years has been the use of a 0% card to do a balance transfer. If you have a balance - or several – sitting on other cards at any rate of interest it can save you money to transfer the amount onto a 0% card.

You can then concentrate on paying off as much as possible, safe in the knowledge that all your repayments are paying the debt alone, without having to service the added burden of interest.

Don’t forget the fees

Most 0% credit cards do carry a balance transfer fee. This can be anything up to 3% of the amount transferred, which can mount up if you have a large balance. It may still be worth paying the fee if it enables you to use the 0% period to pay as much as possible to the balance. Some card providers don’t have a fee but they are few and far between.

The art of using the 0% interest period is to transfer again if you have a remaining balance but want to use 0% interest to continue paying the debt. It is essential that you do this in time however. It takes around six weeks for a new transfer to be processed. Making a note to do this in advance will enable you to move seamlessly from one 0% offer to another without any (interest) glitches.

Purchase with free credit – but hurry the offer is limited!

Many cards now offer 0% on purchases and this can be useful if you want to make a large purchase and spread the payments over a period of time without racking up interest.

The cost-effective way to use this type of card is to ensure you pay for the purchase within the 0% offer period, otherwise the item will cost more than you originally apid for it, in interest payments.

For instance, if you buy something costing £1,200 and the offer period is ten months you will need to repay £120 onto the credit card every month. One of the best ways to ensure you do this is to set up a direct debit for the amount and then factor this payment into your monthly budget.

Some card providers will only set up a direct debit for the minimum amount but ask them to set it up for more – many will oblige. If they won’t allow this, make a diary date to send a cheque to pay the remainder or to pay over the phone each month without fail.

Don’t mix and match

If you are using the same card for a 0% balance transfer and also 0% on purchases be careful.

If the 0% on purchases offer runs for a shorter time (say three months) than the 0% on balance transfer it is likely that the credit card company will offset any repayments you make after the three months against the transferred balance rather than any balance remaining against purchases.

This means that you will be accruing the full rate of interest on any purchases that you made in the offer period but did not repay. This can be a typical APR of say, 14% to 16%.

Therefore keep your balance transfer card separate to your purchases card. If you don’t want to carry too many different credit cards just make sure you pay off all the purchases within the offer period.

See also how to escape the 0% credit card trap.