Credit Card Questions & Answers

Related FAQ's Q. What is the allocation of payments clause? A. The allocation of payments is a listed clause in the terms and conditions of every credit card. This clause basically states the order in which payments you make to your account will be applied. Q. Is a balance transfer deal that requires me to spend on the card any good? A. Spending required balance transfer deals are somewhat of a ploy implemented by certain credit card companies to claw back lost profits from 0% deals. Q. Why are only some 0% balance transfer credit cards suitable for new purchases? A. It may seem an obvious assumption to make - it's a credit card, why wouldn't it be suitable for using to pay for new purchases? However, the main potential rate-trap - the one used to lure unsuspecting customers into paying for "the champagne at the shareholders meeting" - of 0% balance transfer credit cards is the one thing you're most likely to do - spending. Q. What is the limit of how much I can transfer to a 0% rate? A. How much you can transfer onto a 0% balance transfer credit card is mostly limited by the credit limit offered when you open the account.

The main reason why most people take out a 0% balance transfer credit card is to transfer a balance from an existing credit card that charges a high level of interest.

However, when it comes to making cash transactions there are a number of reasons why you should avoid using your 0% balance transfer credit card. This includes:

• Any repayments that are made on your card will go towards the balance that is not accruing interest, leaving your cash transaction balance to accrue cost interest charges.


• The high charges that credit cards apply for cash transactions

Avoid using your 0% balance transfer card for cash transactions
Using a credit card for cash transactions can prove to be very costly with many cards, and with balance transfer credit cards the fees and charges for cash transactions – and even for purchases in some cases – can be higher than average.

This means that if you use your 0% balance transfer credit card to make cash transactions you could be paying through the nose, which could offset any savings that you make on interest by transferring your credit card balances onto the card.

It is a good idea to avoid using any credit card for cash transactions unless absolutely necessary, because of the fees and charges associated with this sort of transaction.

However, the increased fees and charges that some 0% balance transfer credit cards apply make it even more expensive to conduct this type of transaction. The whole point of using a 0% balance transfer credit card is to make savings by avoiding interest charges, and therefore it makes no sense to then pay extortionate fees on cash transactions.

Another thing to bear in mind in that these credit card companies will often apply any repayments that you make to your transferred balance, which is of course free of interest, and this means that any balance that you have accrued through cash transactions is left to continue racking up interest, and over time this could see your balance swell considerably.

Rather than using your 0% balance transfer credit card for making cash transactions – or even purchases in some cases – it is worth looking for another card that offers lower fees on cash transactions and purchases, as this could help you to save money on charges and fees, and means that you will be able to repay any new withdrawals or purchases straight away.

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