Saving Money in the household: 0% credit cards guide: Frequently asked questions



Helping you to save money at home: 0% credit cards: FAQ

> Can I get a credit card if I have a low credit score?

You likely can, but you really should be asking lots of questions, and possibly taking advice, on whether this would be a solution to your cashflow, or simply making it worse. As a general rule, you will be charged a premium for taking out debt when your credit score is not as good as you would like it to be. The advice is generally to avoid taking out more debt when your credit rating is already low -- its expensive, and may cause more problems than it solves!

> How long does it take to get a credit card loan decision?

There are companies that promise to deliver a decision on your credit application within minutes, either on the telephone, or online. Don't be in too much of a hurry, however. It's far more important to seek out the best deals (longest lowest interest rate) and to have researched your credit rating before you rush ahead making credit applications!

> How do I know if my credit score is any good?

As a guide, the average US credit score is around 700 (694, in fact). You can contact companies like Experian (there are others, like Equifax and Transunion) and for a fee you can view your credit file on the internet, check your current credit score, and see how attractive you are to lenders. The higher your credit score, the more likely it is that you will be offered a decent interest rate. The horrible irony is that as your credit score sinks, and you could do with a better interest rate still, you actually have to pay more for the money you borrow!

> How can I calculate what the minimum monthly payments on my credit card will be?

This does depend somewhat on the lender, and there have been recent changes to the regulations to make the minimum payments on your credit card more standardized throughout the industry. The absolute best answer is to seek out someone who works for the credit card you intend to be with who understands the current rate of interest, the terms, and the fees involved, and ask them directly, even if you use hypothetical amounts of money that you might borrow as an example.

But I can offer a crude, rule of thumb calculation to give you some idea before you do that:

MINIMUM REPAYMENT = (at least)1% of the balance + current month interest + default charges + annual fee
If you prefer it in words:
Your minimum repayment guide will be at least 1% of the outstanding balance. Then you add the current month's interest, PLUS default charges and the annual fee goes on top of that.



Credit card debt: Frequently asked questions

> Should I transfer the balance from one credit card to another?
If you are paying an interest rate in the teens (or more!) on an existing credit card debt, and your credit rating is still OK - then you should definitely consider transferring the balance from the card on which you are paying interest to a 0% balance transfer card. The ultimate aim is to get the debt paid off quicker, which you can do by paying no (or less) interest on the new card to which you transfer the balance. How it works: The new card effectively pays off the old card. On the old card, you may have been paying 16% or more interest; on the new card you pay NO interest for a limited time. The best deal I know of at the moment is one where you pay 0% interest on balance transfers for 18 months!

What's the catch if I transfer the balance to a 0% card (on balance transfers)?
Nothing's free! Though you will get months and months of interest free payments, you will be charged a flat balance transfer fee, usually a couple of percent of the total balance.

> Do I need PPI (Payment protection insurance)? My credit card company is trying to sell it to me!


PPI has a bad name; you may have heard of the payouts that have been made to customers who were mis-sold PPI. You should definitely be self-employed in order to benefit from PPI in any case.


> What do I do if I can't afford to make the minimum payment on my credit card this month?

First, don't panic! If its a one-off, the first thing you must do is to communicate with your credit card company. They will treat you better if you inform them at the first sign of trouble. If it something that is going to be more long-term, again tell them immediately, but also seek further advice.

> I've heard someone say I can make money by credit card stoozing. What is that?

Stoozing is advanced technique of actually *making* money out of credit cards, rather than saving money by using them to your advantage. Its not for the disorganized or faint-hearted, however! Since its not really about frugality, its not something I'll mention more, but its a peculiar word and i just wanted to type it: 'stoozing'. LOL. You can find out more about stoozing if you really think you are up for it!


Enter the costingless 0% credit card contest here.