Wednesday 8th of July 2009
One way to stop paying interest on credit card debts is to move existing balances to a zero per cent interest rate deal, it has been suggested.
While an individual voluntary arrangement (IVA) could freeze interest repayments on credit card debt, lovemoney.com reported that over the past two years, the average interest rate for credit card purchases has increased.
It now stands at an 18.1 per cent annual percentage rate (APR), an increase from the 16.3 per cent APR it stood at two years ago.
IVA advice could be required for borrowers who use their credit cards for ATM withdrawals. The financial resource noted that the typical credit card charges 25 per cent APR higher than the base rate for cash withdrawals.
"With a zero per cent transfer, you pay no interest on transferred balances for an extended period, typically five to 16 months," the article noted.
However, an IVA could still be required to freeze the interest on credit card debt.
Recent research from uSwitch.com found that one in ten people have had a credit card application rejected in the past year, which may include applications for zero per cent interest deals.
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- Have you stopped paying your credit card bills in full?
