What credit card 'tarts' should do next

Lenders seem increasingly reluctant to give customers with imperfect credit ratings their best balance transfer cards. But what if you’ve come to rely on shifting debt between 0% deals?
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The Independent Online

Savvy credit card borrowers have long seen 0 per cent balance transfer credit cards as a key tool for dealing with debt. In the days before the credit crunch, "tarting" - the process of shifting otherwise expensive balances from one promotional offer to another - was regarded as a way for borrowers to beat banks and credit card companies at their own game.

Now, however, both reports from within the industry and anecdotal evidence suggest tarts' tactics may have begun to backfire. More and more credit card applicants are being turned down - particularly for balance transfer deals.

In addition, the number of attractive 0 per cent offers on the market has declined during the past year.

So what should you do if you’ve developed an addiction to these deals?

1. Check your credit report

When the credit crunch hit, lenders' appetite for risk seemed to wane overnight. As a result, credit card providers began to apply increasingly stringent criteria when assessing applicants’ suitability for their market leading deals.

If it's been some time since you applied for new credit or if you have recently been refused a balance transfer, it’s a good idea to get hold of your credit report. You can access it for free online through Credit Expert when you sign up for its 30 day trial - just remember to cancel the service before that time is up if you no longer require access to the information.

If your credit report shows you have recently missed debt repayments, that you have defaulted on a past debt or have made payments late, you may need to think twice about applying for an interest free deal.

Most credit card providers now require that 0% customers have a spotless history - so if there are few blemishes on your borrowing past, your time as a tart may be over.

2. Don’t apply "just in case"

If you’re in any doubt that your credit rating is good, don’t apply for a 0 per cent balance transfer card on the off chance you will get it.

Any application for credit will leave a "footprint" on your file that other lenders can see, so being rejected for the deal you want may not just be annoying - it could have serious side effects.

Too many attempts to get credit within a short space of time - even if all of your applications are rejected – could cause the quality of your credit rating to spiral downwards. The more credit applications you make, the more likely lenders are to assume you are financially overstretched.

Therefore, it's vital to plan your applications for financial products carefully. Try to make sure every search that is performed on your credit file is likely to yield a good result.

3. Consider alternatives

If you think it might be difficult for you to get a new 0 per cent deal, don’t despair.

Long term, low rate balance transfer cards (sometimes known as lifetime or life-of-balance cards) are an excellent alternative to interest free deals.

These usually offer affordable rates of interest on balance transfers for a period of years or, in some cases, until the whole transfer has been repaid.

Long term, low rate cards remove the need for repeated credit applications, and may be easier to obtain than cards with 0 per cent offers.

Alternatively, a market leading personal loan, while more expensive, could still cut the cost of a standard credit card balance by around 10 per cent APR.

4. Shift debts between your existing credit cards

If you have spare credit on any of your existing cards, it may be worth asking your provider for a special balance transfer deal.

This is a particularly good idea if you have a credit card that is currently clear. In order to win back your business, it is possible your provider will offer you a low promotional rate.

Even if you’re unable to transfer all your debts or reduce your interest payments to zero, this method could still make a positive difference to your situation.

Remember, if the average interest rate paid across all your debts decreases you will save money - and by paying less interest, you’ll be able to clear your balances more quickly.

5. Prioritise your debts

Finally, it’s important to take a clinical approach to clearing your credit card debts.

Whether some, all or none of your balances are at promotional rates, it makes sense to repay the card with the most expensive APR first.

Paying as much per month as you can off your most costly credit cards (while paying the monthly minimum required off your cheaper balances) will allow you to deal with your debts efficiently and cost effectively.

What’s more, you will experience a wonderful sense of achievement as, one by one - and in the right order - your outstanding balances begin to disappear.

Laura Starkey is from BeatThatQuote.com

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