Rate Tart - The Guide
Rate tarts are the smart shoppers of the credit card world. They play the system to avoid paying interest on purchases, borrow money for free, and even make money on that borrowed money!
Purchasers with Power
Rate tarts know that in the world of credit cards, the consumer can be king. Credit card companies are fighting for new customers with a bewildering array of special offers, incentives and attractive APR rate. The rate tart also knows that, when it comes to spending, there is only one APR that counts – 0%.
A rate tart will seek out the credit card that is offering 0% on purchases and use that card for purchases – and nothing else. Then, when the 0% rate is about to expire and the card’s standard rate is about to kick in, they will simply ditch that card and find a better rate with a new card.
Balancing Act
Rate tarts also know that balance transfers are a great way to pay off existing credit card debts at 0% APR. They will research credit cards that do not charge for balance transfers, and simply offload any remaining debt from their old credit card (or cards) onto a new one offering 0% on balance transfers. It costs them nothing, and the new credit card does all the paperwork.
More Info: Quick Balance Transfer Guide
The Balance Transfer Golden Rule
Rate tarts NEVER use the same card for purchases and balance transfers. This is because most cards allocate any repayments to the cheapest interest rate items for repayment first, and then allocate to the more expensive last. So, if the balance transfer is at 0% and the purchases at 15%, the balance transfer will be paid off first, leaving the expensive purchases to accumulate interest for longer.
Minimum Payments – and then some
Making the minimum payment is crucial, and adding a little on top also ensures that the introductory rate is not withdrawn unexpectedly. Set up a Direct Debit for the minimum payment and then top this up with occasional small extra payments to keep the credit score healthy.
Timing is Everything
Forget birthdays or anniversaries, the most crucial date in a rate tart’s diary is their card special deal expiry dates. This date triggers a series of time-crucial events that ensure they never miss out on a good deal.
Expiry date minus three months:
Assess potential financial activity over the next three months, especially big events such as moving house, changing jobs or going self-employed. All major changes affect credit ratings and make credit card applications more complex. Make any applications before such events.
Expiry minus 2 months:
Research new credit card deals through the press and internet. Choose three or four possible candidates, and investigate their terms and conditions. Check the banks behind the credit card companies to avoid any duplicating that are held already. (Balance transfers are not usually allowed within cards from the same banking group.) Check credit report via Experian, Equifax or CallCredit.
Expiry minus six weeks:
Choose one card at 0% APR for purchases, and one card at 0% with no balance transfer fees for transferring. (Apply online to secure these rates on some cards). Apply to transfer any outstanding debt on any card due to expire to the balance transfer card ONLY.
Expiry minus two weeks:
Once the card applications have been approved, check all balance transfers have gone through, and no outstanding balance exists on the expiring card. Learn the new PIN number!
Expiry date:
Cancel the old card, wait two weeks and then check it really has been cancelled. Once cancellation has been confirmed, destroy the old card.
Expiry date plus 1 day:
Put the special deal expiry date of the new card in the diary. Repeat.
To become a fully-fledged rate tart, read the article Make Money with a Credit Card!
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