Why multitasking with your credit card can work against you
Posted at by ifydcat on category CreditAs a general rule of thumb, the same credit card should not be used for purchasing items and to transfer previous debts, it has been claimed.
While finding a card that allows you to not only make interest free purchases, but also transfer an existing balance and pay no interest for the specified period can prove to be a great help, credit cards should still always be used with caution, it has been reported.
Although many credit cards are very useful for both their interest-free purchases and balance transfer features, Jane Baker highlights in a lovemoney.com article that those that attempt to use the card for both of its 0% features could face unexpected charges.
The damage that using one credit card for both making purchases and transferring a balance can be substantial, she claims, especially when considering the Virgin Credit Card.
Although the card provides its users with the longest 0% period on balance transfers than any other card on the market, its interest-free period on purchases is much less competitive, with just 3 months.
And while the Virgin Credit Card sees borrowers receive discounts on goods and services bought from elsewhere within the Virgin Group after the 12-week offer is up, the lovemoney.com writer states that this could cause the borrower to lose out.
"If you keep spending on the card once the three months are up, taking advantage of all those juicy discounts, you'll fall into the negative payment hierarchy," Ms Baker claims.
However, it could be possible for borrowers to avoid being hit by negative payment hierarchy should they opt for the Halifax All In One credit card. This, she states, is due to the incorporation of competitive 0% deals, with 9 months offered on both purchases and balance.
She points out that people should ensure all debts owed on the cards are paid off by the 0% period is up, or the typical rate of 15.9 per cent will be added.
People on the search for the best interest free purchases card were also advised to consider the Tesco Credit Card, which she points out offers 12 months 0% on purchaseson the condition that at least the minimum monthly repayments are met.
Another to recommend the Tesco Clubcard was lovemoney.com writer Serena Cowdy who recently claimed that the 0% balance feature is “perfect for gradually paying back big expenses”.