How to beat credit card debt

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Excepting the unusually disciplined amongst us, at some point in our lives most of us find ourselves in some kind of credit card hell. Modern living is full of such problems and there are periods when the credit card trap can seem like one of the most sinister that we will come across in the present society. The bait of course is the convenience with which we can attain whatever our hearts wish - the immediate gratification of the deal - and the knowledge that we have also bought ourselves some time with regards to the repayments.

The cost if you get it incorrect and overstretch, can feel like financial disaster. Choosing a credit card has thus turned into, for many, a decision worthy of serious consideration. We all seek to know that we're not getting ripped off and, as far as possible, we'd all like to think that, unlike all the other saps, we're saving money. In truth of course it's possibly best to forget the idea that there is one credit card that towers over every other and represents the ultimate deal for everybody. No such holy grail exists and in fact there's really no such thing as a one-size-fits-all credit card. This isn't to say that there are no good deals out there; it's just that it's more a case of going for the right card for your specific needs.

The onus is also on you to manage your credit cards effectively and make them work to your financial benefit. So the first question is: Do you already have credit card debts? If you do then your priority should be to find a card with a good balance transfer rate - there are plenty out there with a 0% balance transfer offer. When you transfer your credit card balance you are effectively paying for your pre-existing debts on one card using a new card so that you now owe money to the new card. If that new card has a special introductory cheap rate for balance transfers then your initial, more expensive, card will be debt free and you'll be paying less interest, potentially 0%, on your new card.

Now, all you need to do in order to rid yourself of this credit card burden at no more cost is to work away at the debts - and in doing so, ensure that you pay the debt off before the end of the introductory cycle. The most important rule to keep in mind is not to purchase anything with your new balance transfer card; if a card allows a genuinely good balance transfer rate then the chances are it won't offer a similarly attractive purchase rate. If you still want to spend on a credit card then you'd be well advised to get another card for purchases and focus solely on paying off your balance transfer debts with the first card. If you're doing this, it's clearly in your interests to find a card with a good introductory deal on purchases. At the time of writing the NatWest credit card was offering the longest 0% interest on balance transfers for 13 months 0% interest on purchases for 3 months with a rate of 13.9% thereafter thereby buying you more time to pay the card off. HSBC is offering the longest 0% on purchases deal of 12 months and then a 15.9% typical APR and even the supermarkets are getting in with reasonable offers with the Asda 0% credit card being the strongest.

To keep track of the market ensure that you see a good, reputable and independent comparison site like Uswitch or the Motley Fool which maintains a credit cards comparison centre. It's important however that you remember when your 0% period expires; before you start shelling out on an inflated APR you may want to consider switching to another 0% card.

So which card is best for balance transfers? If you're searching for the longest 0% period then Virgin steams ahead with an impressive 15 month interest free period on balance transfers, they do however charge a relatively high 2.98% fee. Perhaps the best overall deals at the moments are offered by RBS credit cards and Natwest credit cards who both offer 0% for 13 months and a lower 2% fee. Other decent 0% credit cards worth investigating are offered by Asda Finance(0% PA for 9 months, 2.5% fee), Capital One Platinum (0% PA until 1st August 2008, 1.7% fee) and Mint (0% until 1st Oct 2008 (2.5% fee)


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