How Credit Card Deals Have Changed How We Borrow Money

As a young budding musician I remember wanting to borrow £500 to buy what was at the time the latest in computer music technology. I had a credit card but the interest on this was so high that I went to my local bank, filled in the forms and about 2 weeks later was told the loan had gone through and the money would be in my account 3 days later. Well how things have changed.

If used carefully credit cards can now be the cheapest and the easiest way to borrow money. Of course I am not encouraging anyone to get into debt but if you have a planned purchase for what you may need to borrow money for, credit cards can now be considered as a cheaper option.

This is because many credit cards now offer zero interest for an agreed time after you take out their new card and transfer your balances off another card to them. So what I have done is bought a purchase on an existing card, then before it accrued any interest have this bill paid off by the new card at zero interest. Then as the interest free period closes I would transfer that balance to another card offering zero or low interest also. By continuously changing cards you can reduce you interest considerably. The other benefit I have found is that I can control how much per month I pay back. If I was to receive a bonus from work I could pay more off my card, again reducing any interest that may be payable.

There is a downside of course and that is you. If you are not disciplined in moving sums around or paying off balances when you have a chance there will come a time when the true interest rate is applied to you card and of course you could pay more than a traditional bank loan. I programme these dates into my computer and near the time a reminder appears and off I go.

I bought my last car using a credit card and then kept changing the cards as time went on to keep the interest rate as low as possible and apparently I got purchase protection too. My friends and family though I was stupid but the garage owner where I bought the car said it was now a "common thing", so I am not alone.

There is something else you need to be aware of. Some credit card deals, even though they advertise zero interest still could charge you an administration charge for transferring your debt across to them. So make sure you read all the small print and be fully aware that zero interest means zero charge or not!

Some say that credit cards make it too easy to borrow money and these special credit card deals just encourages more debt. I believe this could be a good argument for some, but for me personally I have been able to save quite a bit if cash just by being clever about how I borrow for planned purchase.