3. When you get a card, always follow the GOLDEN rules
Getting the right card is only the start point. To make it work you need to strictly follow the recipe, or it can leave a sour taste.
a) Clear debt before the 0% ends. Clear it or transfer again before the 0% ends or you’ll pay the rep APR – which is never cheap.
b) Never miss the minimum monthly repayment. Or you can lose the 0%. It’s best to set up a direct debit for the minimum payment as a safety measure to ensure it happens. Yet it’s better to pay debts off quicker if you can – so you can still make manual repayments on top of the direct debit.
c) Don’t spend/withdraw cash on the card. It usually isn’t at the cheap rate and it’s best not to build up other debt while you’re trying to repay what you’ve already got.
d) See if you can use existing cards more efficiently too. If you’ve more than one existing credit card, you can sometimes use them to move debt to where it’s cheapest.
Let’s say your 30% APR card is maxed out, and you’ve another at 18%, which isn’t. You may be able to shift debt from the 30% to the 18% card, saving you cash without affecting your creditworthiness. In fact, some lenders offer special existing-customer balance transfer deals – always aim to move debt to where it’s cheapest.
e) Got multiple debts? Repay highest APRs first. Some try to repay their biggest debt first, or spread repayments equally. Yet it’s the debt with the highest APR that’s growing most quickly, so that’s the priority.
Focus all spare cash on clearing that debt, paying just the minimum on all others. Once it’s clear, focus on the next highest APR and so on. And do include overdrafts in this – at 40% many of them are far more expensive than credit cards. If so, prioritise clearing that before the cards.
