Did you know that there is more than double the amount of credit cards today than there are people living in the UK? Last year there were over 145 million credit cards floating around and that figure is growing. Credit cards have become a major part of our financial life and there ain't a darn thing that we can do about. No credit crunch of any magnitude to going to change this. One of the major uses of credit cards, apart from purchases of course, has become for balance transfers. You may have transferred your balance in the past or perhaps you are considering the possibility in the future. Maybe you have even become a "card tart" - a serial balance transferor. However you have decided to play things, you need to be warned that changing credit cards over and over can and does have adverse effects.
Back at the dawn of time (at the turn of the century actually) when 0% balance transfer cards were introduced the companies didn't seem to realise that this was going to be the case. The rebels grew and grew. Fighting back, the card companies introduced balance transfer fees in around 2005. At this time it was estimated that credit card companies were losing around 1 billion a year in admin costs and lost revenue, so you can see why they made the move. Currently these fees are now around 3% of the balance that you wish to transfer. Still this didn't deter the card tarts and people still regularly transfer. Now in a startling turn of events card companies are once again banishing fees to the outer regions but why?
The reason is that they have discovered a more direct approach to dealing with the small pockets of resistance: they simply don't give them a card. When you apply for a credit card the card company checks your credit rating with one of the credit referencing agencies. Your credit rating is a record of your relationship to credit companies and contains information on the cards you've applied for, the amount of credit given, how prompt you have been with repayments and so on. If the credit provider notices a tendency of card tarting on a regular basis they will decline your application because you simply don't make them enough money.
Now credit card companies are on the look out for card tarts in a similar way to police scouring the streets for people selling dodgy goods. They expose tarts by examining credit histories. Your credit history is what determines whether you are accepted for credit or not. It is held by a credit reference agency, which then discloses the details to the banks. The credit reference agencies simply compile data on credit use. On your credit file will be all of the cards to which you have applied, have been accepted for and the credit limits given. It also has details of repayments you have made - or failed to make.
So what's the deal? Yes you can by all means transfer from card to card in order to take advantage of those lovely 0% credit card balance transfer offers but you must remember that it is recorded on your credit history. In the future this can affect new card applications. Is there a way around this? Well you could possibly make sure that the rest of your rating is as perfect as possible. Or you could throw the odd purchase on the card whilst paying off the balance. You could even keep hold of the card for a while after the 0% period ends just to make all of the credit companies happy. In the end it is entirely up to you - but you have been warned! - 15224
Back at the dawn of time (at the turn of the century actually) when 0% balance transfer cards were introduced the companies didn't seem to realise that this was going to be the case. The rebels grew and grew. Fighting back, the card companies introduced balance transfer fees in around 2005. At this time it was estimated that credit card companies were losing around 1 billion a year in admin costs and lost revenue, so you can see why they made the move. Currently these fees are now around 3% of the balance that you wish to transfer. Still this didn't deter the card tarts and people still regularly transfer. Now in a startling turn of events card companies are once again banishing fees to the outer regions but why?
The reason is that they have discovered a more direct approach to dealing with the small pockets of resistance: they simply don't give them a card. When you apply for a credit card the card company checks your credit rating with one of the credit referencing agencies. Your credit rating is a record of your relationship to credit companies and contains information on the cards you've applied for, the amount of credit given, how prompt you have been with repayments and so on. If the credit provider notices a tendency of card tarting on a regular basis they will decline your application because you simply don't make them enough money.
Now credit card companies are on the look out for card tarts in a similar way to police scouring the streets for people selling dodgy goods. They expose tarts by examining credit histories. Your credit history is what determines whether you are accepted for credit or not. It is held by a credit reference agency, which then discloses the details to the banks. The credit reference agencies simply compile data on credit use. On your credit file will be all of the cards to which you have applied, have been accepted for and the credit limits given. It also has details of repayments you have made - or failed to make.
So what's the deal? Yes you can by all means transfer from card to card in order to take advantage of those lovely 0% credit card balance transfer offers but you must remember that it is recorded on your credit history. In the future this can affect new card applications. Is there a way around this? Well you could possibly make sure that the rest of your rating is as perfect as possible. Or you could throw the odd purchase on the card whilst paying off the balance. You could even keep hold of the card for a while after the 0% period ends just to make all of the credit companies happy. In the end it is entirely up to you - but you have been warned! - 15224
About the Author:
John Evans writes for various popular financial websites. He specialises on providing consumers with clear information on credit card matters. Find out more about compare credit card and the UK card here.
