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While the Christmas season is such a supposed time of festive cheer and good warm feelings inside, it seems to inevitably require an advent run up of weekly spending sprees at Sainsbury's and stress-filled trips round the nearest high street.
There is little question that Christmas is, whether you love it or hate it, the year's most nightmarish time.
However, the nightmare doesn't have to prevail your bank account as well as your mental wellbeing.
Though it seems, certain credit card companies have been downing the Freddie Kruger gear in the attempt to earn a Christmas bonus for themselves.
Culprit #1
The spending required balance transfer offer
There has been many an article written on 'avoiding the hidden traps of balance transfers', paying specific attention to the infamous 'allocation of payments' clause - many of which can be found on this site.
But now, in a period of such consumer credit uncertainty, a credit card has been launched - just in time for Christmas no doubt - that actually requires you to do the thing all those balance transfer articles have been telling you not to do!
The offer is such:
- 0% on balance transfers for 12 months (3% transfer fee) - £100 must be spent within 3 months.
- 0% on purchases for 6 months.
If you don't spend that £100 in the allotted time - your year-long balance transfer will rather abruptly finish just 3-months after you opened your account.
And if you do spend the required £100 - half way through your enjoyable 0% period, that £100 will start to rack up 16.9% p.a. interest, and any payments you make to your account will all go towards your "0%" balance transfer, which will have to be repaid in full, before you'll even be allowed to pay back a penny of that required spend.
This offer effectively involves a credit lender requiring you to get further into debt - a debt that with the effect of reason, you'll not be able to repay - to get an interest rate offer you'd only have to walk next door to beat - which wouldn't have a spending requirement! [Compare 0% balance transfer credit cards]
Named and shamed:
Lloyds TSB Platinum MasterCard
Culprit #2
The 3-month 0% purchase offer and 12-month 0% balance transfer offer
While this offer abounds most of the credit card market in the UK today - and it's not an offer that hasn't been torn apart and pointed at many times before... It's still worth a mention, even if it saves just one person some of their hard-earned cash!
The important thing to note with this type of offer, however, is that the trap can be avoided - simply by only using the card for a 0% balance transfer - which means no spending and no withdrawing cash! In fact, once your balance is transferred - don't use the card at all!
The offer is such:
Transfer your balance to the new credit card and get 12-months interest free credit - great!
What's more, you can spend on the card and get 3-months interest free credit on your purchases too!
...Is how most of these credit card adverts read.
However, what these cards also implement is an order in which payments you make to your account will be applied.
An order in which "promotional balances will be repaid before balances at higher rates of interest" and that "where there are two balances at a promotional rate, the balance with the longest promotional period will be repaid first".
What this means is that any payments you make will be prioritised to your 0% balance transfer, and any purchases you've made during their 3-month 0% period or afterwards, will, 3-months after you opened your account, start accruing interest, and you won't be able to repay any of your purchases (or cash transactions – ATM, check-out cash back, foreign currency, etc...) until you've first fully repaid your balance transfer.
If you do really need to get one credit card that offers 0% balance transfers and 0% on purchases - make sure the 0% periods last for the same period of time [Compare 0% balance transfer and purchase credit cards]. If they don't, either use the card for one 0% offer or the other - but not both.
Named and shamed:
Most of the UK credit card market!
Have a look and compare 0% balance transfer credit cards to see just how many credit card companies are culprits of implementing this ploy!
And compare 0% balance transfer and purchase credit cards to see the credit cards that are safe to use for both 0% balance transfers and 0% purchases.
Lighten the load wisely...
If you are looking to lighten the load on your bank balance this Christmas - do it wisely, and make sure you've got not only the best deal you can, but also that you know how to make it work the best for you.
Find out more in our guides on:
0% purchase credit cards:
- How 0% Purchase Credit Cards Work
- How to Compare 0% Purchase Credit Cards
- How to Use 0% Purchase Credit Cards
and finally - Compare 0% Purchase Credit Cards
0% balance transfer credit cards:
- How 0% Balance Transfer Credit Cards Work
- How to Compare 0% Balance Transfer Credit Cards
- How to Use 0% Balance Transfer Credit Cards
and finally - Compare 0% Balance Transfer Credit Cards
0% balance transfer and purchase credit cards:
- How 0% Balance Transfer and Purchase Credit Cards Work
- How to Compare 0% Balance Transfer and Purchase Credit Cards
- How to Use 0% Balance Transfer and Purchase Credit Cards
and finally - Compare 0% Balance Transfer and Purchase Credit Cards
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