Loans | Finance | Mortgages

It is that time when the Credit card debt increases two fold as we come together to celebrate Christmas and the holidays. It is the time of year were people let go a bit and tend to overspend on gifts, lunches and of course alcohol. Although the kids like the presents, the lunches fill your belly and the alcohol keeps the Christmas spirit alive. The hangover on the credit card debt doesn’t go away as fast as the hangover from the eggnog.

New Zealand’s major electronic transfer provider Paymark released statistics this week on New Zealand’s spending habits. Kiwis have spent just under $3 billion at shops around the country between Dec 1 and Dec 20. According to Lafferty Cards Insights retail spending on credit cards in New Zealand during 2010 was 61.4 per cent. Projecting this data onto this year’s sales figures and that’s a staggering $1.8 billion New Zealand is spending on credit cards this Christmas.

How do you manage this credit card debt hangover?

One of the simplest solutions is to chop up the credit card to stop you using it, but this might not be possible. A more practical way to manage your credit card debt is to seek out 0% Interest credit card transfer. There are things to be weary of when you transfer your credit card balance of an old card to a new one.

Firstly, check how long the new credit card’s 0% interest will be. Secondly, ask the question of what happens when you purchase items on the new card. For example, a lender may offer a credit card balance transfer rate of 0% for 6 months when transferred from another card, however use this card for any purchases and you’ll be paying an interest rate of approximately 19%. The 0% interest does not apply to any purchases, and worse still the payments you make go toward paying off the balance transfer first.

This is where a lot of people get trapped. The enticement of the 0% interest on their transfer gets them through the door then they make good profit of your purchases.
It is important to read the terms and conditions of the credit card. This is normally in really small grey print on the bottom of their website. Westpac NZ is a great example of these. Sometimes this can be hard to find and hard to understand so if you don’t get it straight away either ask a friend or better still ask the bank directly.

The secret to managing 0% credit card balance transfers is to use them for just that, a way to reduce the interest on your existing card. Do not use this card for purchases on to store your balance at a lower rate while you pay it off… If you can do this, the 0% balance transfer will be beneficial to you. Remember though to watch out for handling fees etc. on the card as they may be excessive.
To quickly recap

A 0% Credit card balance is great if you use them to for only that in mind
Read the fine print before signing up
Check what the monthly fees are before you sign up
Evaluate each 0% balance transfer credit card offer and go with the option you feel works for your circumstances.