It was a long time ago on a planet really nearby… Secretly, in the shadows, there has been a battle going on, a battle between the lone wolf ‘card tarts’ and the armies of the credit card companies. A card tart (also occasionally referred to as a rates tart) in case you didn’t know is a person who applies for a credit card and works up a healthy balance. Then realising that the repayments are getting a bit steep makes a credit card balance transfer onto a card offering a 0% transfer free period, now averaging around 10 months. The problem is that after the period ends they want to transfer again and again and again. Ad infinitum! In other words they wielded their 0% cards in front of them, like a light-sabre, keeping the forces of interest oppression at bay.
If you aren’t a card tart, but have tarting tendencies, then you need to know that the addiction develops along these lines. You have a card with a balance that has gotten a little out of hand. You are making your monthly repayments but are paying so much interest that you are hardly reducing the amount you owe at all. So what do you do? You jump to a card offering a 0% credit card balance transfer period. The length of this period varies from card to card but is now somewhere in the region of 10 months interest free. During these, say, ten months you pay off the balance as much as you can and then, not wanting to pay more interest, you leap to another card and so on.
The thing is that transferring balances become addictive in a weird sort of way. It is obvious why - you pay no interest and then the free period draws to a close and you simply don’t want to go back to paying interest. It’s understandable but the problem is that every time you transfer your balance it is recorded on your credit history, which affects future applications. The fact that so many people started transferring here, there and everywhere was the reason that the credit card balance transfer fee was introduced (currently it is around 3% of the amount you transfer) perhaps this didn’t deter people as much as they had hoped. Now credit card companies look at credit histories more carefully for this ‘tarting’ trend and are reluctant to take on serial offenders, after all they aren’t making much money out of the deal.
Now credit card companies are on the look out for card tarts in a similar way to police scouring the streets for people selling dodgy goods. They expose tarts by examining credit histories. Your credit history is what determines whether you are accepted for credit or not. It is held by a credit reference agency, which then discloses the details to the banks. The credit reference agencies simply compile data on credit use. On your credit file will be all of the cards to which you have applied, have been accepted for and the credit limits given. It also has details of repayments you have made - or failed to make.
So what’s the deal? Yes you can by all means transfer from card to card in order to take advantage of those lovely 0% credit card balance transfer offers but you must remember that it is recorded on your credit history. In the future this can affect new card applications. Is there a way around this? Well you could possibly make sure that the rest of your rating is as perfect as possible. Or you could throw the odd purchase on the card whilst paying off the balance. You could even keep hold of the card for a while after the 0% period ends just to make all of the credit companies happy. In the end it is entirely up to you - but you have been warned!
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