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By Rachel Preece
Staff Writer, 21 August 2008
AS the headlines continue to look bleak and the UK's economy is less than steady - now is the time to get in control of your personal economy and get debt free by 2010.
Balance transfer credit card deals are as competitive as ever and with 0% periods now lasting for a record 16 months, there is now even more time to be had interest-free to keep your repayments knocking off 100% of your principle balance instead of a chunk being swallowed up by interest charges.
UK economic situation
With prices rising and mortgages harder to get, the UK economy has certainly seen better days. The price comparison site mysupermarket.co.uk recently reported that food prices had increased by 7.7% over the last year, with the average family spending £1,400 more in supermarkets than a year ago.
Transport costs have also soared - and many people have had to cut back on expenditure as a result of increasing gas and electric prices. British Gas customers now face a £416 increase in gas bills from this time last year, and it seems that no-one has escaped the tightening of belts in the UK.
It's becoming ever difficult to get a mortgage too, and the Council of Mortgage Lenders recently released data which stated that there had been 18,900 repossessions from January to June of this year, compared with 12,800 in the same period last year.
It's clear that many Brits are finding it a struggle to live comfortably, and with all of those debts as well as the threat of a recession, a doom and gloom attitude would be understandable.
But it's not all bad news - although there are concerns over a recession, many authorities have advised that if the UK does enter a recession, it won't be as damaging as the recession in the early 1990s.
Credit card companies are still as keen as ever to offer great deals on credit cards too, and there are many ways out of debt.
Moving your credit card balance to a promotional offer
Although it might seem a hassle to move your balance to another credit card, it is actually a relatively easy process - and can save you a lot of time, effort and money in the long run. The sooner you pay off your debts, the sooner you can free up your monthly income to weather the storm, should the cost of living continue to rise.
If you use a 0% promotional balance transfer deal, the money you spend on paying off your debts will benefit you 100% - all of the repayments you make will be going towards clearing the balance (on a 0% deal), meaning that you're avoiding those niggling interest charges.
With balance transfer credit card deals as competitive as ever, now is the best time to consider switching your balance to make your credit card work for you.
There are some fantastic deals on 0% balance transfer credit cards (including Capital One's 16 month balance transfer deal), and if you think you won't be able to pay off your balance in the 0% period, why not consider a life of balance transfer credit card deal, where the interest rate remains low until you’ve paid back the balance in full.
Remember to plan
Remember to work out how much you can afford to pay back each month, and how long it will take you to pay back the outstanding balance. With a 0% balance transfer credit card deal, you could be saving months of repayments, as each repayment will be entirely devoted to paying off the balance, rather than paying off interest.
Try to stick to repaying back as much as you can comfortably afford to, and set a date to become debt-free. With a goal in mind, becoming debt-free is less of a struggle.
Choose a balance transfer credit card deal that's right for you
There are three types of balance transfer credit card deals available.
One option is the 0% balance transfer credit card deal, giving you several months without interest.
At the moment, Capital One's 0% Balance Transfer and Purchase credit card is in pole position, offering 16 months interest-free. Virgin and Barclaycard are just behind, offering 15 months - and it's worth checking out the deals on all three, as there are various special offers with each credit card, including store discounts and free travel insurance.
If you are confident that you can pay off your balance within the 0% period, then it's well worth looking at the 0% balance transfer credit card deals on offer, and make your credit card work for you.
If your balance will take longer to pay off, then a life of balance transfer credit card deal would be preferable.
Although not interest-free, with such a low interest rate for the life of the balance, it's an easy way to pay off your debts without having to transfer your balance when a promotional period ends. At the moment Capital One's Low Rate Balance Transfer credit card is the best buy, offering 5.5% APR for the life of the balance.
The final option would be to consider a 0% balance transfer and purchase credit card deal.
Most regular 0% balance transfer credit cards are unsuitable for spending, as the interest from your purchases would accumulate until you’d paid off your balance transfer, deeming the 0% balance transfer offer pointless.
If you do want to spend on the same credit card, then have a look at our section on 0% balance transfer and purchase credit cards. Capital One is again in the lead, with the Capital One Platinum credit card.
Balance transfer credit cards are the way forwards if you want to get debt-free by 2010. With an unstable economy, life can be hard enough, so make one thing that little bit easier, and consider switching to a balance transfer credit card deal.
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