Is it a good idea to be a 0% balance transfer ‘rate tart’?

Credit cards have become hugely popular in the UK over the years, with many people from all walks of life relying on their credit cards to make one off purchases, day to day purchases, or simply for sheer ease and convenience. Some people use their credit cards only in emergencies and others use them on a daily basis. Whatever your credit card spending habits, there are plenty of different credit cards on the market, so finding one to suit you shouldn’t pose a problem.

One of the cards that has become popular on the market over recent years is the 0% balance transfer credit card, which enables consumers to save money on interest charges on their credit card balances. The 0% balance transfer card works by enabling the cardholder to transfer balances from existing high interest credit cards. You can transfer as many different existing balances as you wish, but only up to the credit limit offered on the 0% balance transfer credit card.

Your 0% balance transfer credit card will offer a period of interest free credit, which will be specified when the card is taken out. Providing the transferred balance is paid off in full with the interest free period specified there will be no interest to pay on the balance that you transfer, and this could save you a small fortune. However, if you have a high credit limit on your balance transfer card and you are transferring a large amount of credit card debt on to the card you may find it difficult to clear the whole balance within the specified interest free period, which can be anything from 3 months upwards, with the highest usually being around 13-15 months.

Keep on transferring

The way that a rate tart gets around this problem is to keep on transferring the balance from their credit card to another 0% balance transfer credit card in order to enjoy extended interest free credit, giving them longer to repay the balance without being charged any interest. In short, a rate tart is a credit card user that regularly transfers the balance from one card to another in order to avoid interest charges on their credit card debt.

You should bear in mind that in order to be a successful rate tart you do need to be very organised, as otherwise you could get your timing wrong and end up being charged interest on your outstanding balance. You need to be aware of exactly when your interest free periods are coming to an end, and you need to make sure that you have another 0% balance transfer card lined up ready for when the previous interest free period is due to end. You then need to make sure that you transfer your balance at just the right time.

If you think that you can repay the balance on your 0% balance transfer credit card within the interest free period offered then there will be no need to be a rate tart. Looking for the 0% balance transfer credit cards that offer the longest interest free periods on balance transfers may make it easier for you to repay the balance without having to switch cards. However, if you do decide to be a rate tart there are another two things to remember. Firstly, rate tarting is not looked upon favourably by credit card companies for obvious reasons – they lost out on interest. Another consideration – one that may affect your own finances – is that most 0% balance transfer credit cards will charge a fee for the amount that you are transferring. In most cases this is a percentage of the total amount that is being transferred, often between 2% and 3%. There may also be minimum and maximum limits on the charges imposed.

Before you get carried away with transferring balances over and over you should make sure that it is going to be worth your while based on the amounts that you may be charged in terms of balance transfer fees. Check what sort of percentage the card providers charge on transfers before you transfer any balance, as otherwise you could end up paying a fortune on transfer fees to save money on interest and it may end up not really being worth your while.

If you don’t really want to be a rate tart because you are not particularly organized or you simply don’t want to take that route there is another solution available to avoid high interest charges. You can opt for a low interest life of balance transfer card, which offers a very low rate of interest for the life of the transferred balance, and there are no transfer fees involved. This means that you can take your time repaying the transferred balance, providing you make at least the minimum repayment each month, and the interest charged will be far lower than you were paying on your previous cards.