The recent announcement that Virgin is offering a zero percent credit card has once more brought to our attention the circumstances of our finances.
So what is it offering? Well depending on which choice you select it provides you 0% on balance transfers for as much as 14 months and as much as 12 months on any purchases. It certainly appears attractive but is it a viable opportunity. 12 months is a long time and the idea of not paying out interest for that duration of time is without doubt attractive. If we’ve got a lot of Credit Card Debt distributed over quite a few cards, then transferring them to one card as a kind of Debt Consolidation would surely be an idea.
One factor we really need to keep in mind is that while there is no interest over the term, there is a fee incurred of 2.98 per cent of any balances which have been transferred. Using this Debt Consolidation method we are better equipped to manage our finances. We undoubtedly have more obtainable finances to pay off that outstanding debt as a result of the lack of interest being charged. For example let’s say there is a £3,500 balance to transfer. It means we save £661 that will have been added as interest over the 12 months. This surely appears like a great Debt Management strategy does it not?
Without a doubt it provides us a bit of breathing space to get ourselves back on an even keel.
In spite of this caution needs to be exercised as like any good deal there is always a catch. If we don’t pay off that transferred balance in the 12 to 14 months then interest shall be charged. With the deal offered by Virgin the yearly rate is a monstrous 21.9% on that balance, along with any purchases we have made along the way will then be charged at 18.9 per cent.
So if we especially want it to work to our benefit then it is vital we budget to pay that off before interest starts adding to it. there is certainly another draw back to this great deal. Though it will undoubtedly make us feel our Credit Card Debt is improving, we could fall into the trap of spending further, feeling secure with the guarantee that we need not have to pay interest on any of it.
Not only have we spent funds that may possibly have been paying off that transferred balance but twelve months down the line we might find ourselves with more debt plus additional interest than before on the initial one.
We then need to scrimp and scrape or look at new 0% deals to transfer to. Not a great Debt Management technique in the long run. Wouldn’t it be far better to get shot of it whilst we have this decent deal, or by the very least minimise it to the level our finances will allow?
So it is a great deal but only if we are wise and won’t let inducement to tempt us in the moment we have an off day. Just consider how thrilling it will be to find yourself in twelve months time either debt free or that much nearer than you could have been.
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