Transfer xmas debt to a low rate card

12/01/2010

Many people are now getting credit card statements detailing their overspending at Christmas time. Community CPS Australia manager of products and member value Brontie Chambers says repaying credit card debt can be speeded up by transferring the balance to a low interest-rate card.

"You can be paying 18 or 19 per cent on an ordinary credit card but there's a lot of low interest rates out there to transfer to some as low as 3 or 4 per cent,'' she says. "That's an enormous saving.''

However Chambers warns that the new card should not be used for spending as well or the savings will disappear. "Most financial institutions will want to sell you a higher limit because they want you to spend at a higher rate,'' she says.

"But if you can resist that and get a low balance transfer, you're much better off. If that doesn't work, things like personal loans and consolidating some of your debts might be the answer.''

Many people are tempted to add their credit card debt to their mortgage. NAB financial planning manager Sharon Walker says people who consolidate credit card debt with their home loan must ensure they pay extra off the mortgage, or they'll be paying off Christmas 2009 for the next 20 or 30 years.

Source: The Daily Telegraph

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