3. When you get a card, always follow the GOLDEN rules
Getting the right card is just the starting point. In order for it to work, you need to strictly adhere to the recipe, otherwise it may leave a sour taste.
a) Pay off debts before the 0% expires. Delete or transfer again before the 0% expires, or you’ll pay the Rep’s APR – which is never cheap.
b) Never miss the minimum monthly repayment. Or you can lose the 0%. To be on the safe side, it is best to set up a direct debit for the minimum payment. But it’s better to settle debts faster if you can – so you can make manual repayments in addition to direct debit.
c) Do not spend / withdraw cash on the card. It’s usually not cheap, and it’s best not to build up any more debt while trying to repay what you already have.
d) Check whether you can also use existing maps more efficiently. If you have more than one credit card, you can sometimes use them to move debt where it’s cheapest.
Let’s say your 30% APR card is exhausted and you have another at 18%, which it doesn’t. You may be able to move debt from the 30% to the 18% card and save real money without affecting your creditworthiness. In fact, some lenders have special offers to transfer existing customer balances – always aiming to move debt where it is cheapest.
e) Do you have multiple debts? Pay back the highest APR first. Some try to pay off their largest debts first or to spread the repayments evenly. But it is the debt with the highest APR that is growing the fastest, so this is the priority.
Focus all of the remaining money on paying that debt, paying the bare minimum for everyone else. Once it’s clear, focus on the next higher APR, and so on. This also includes overdrafts – many of them are 40% more expensive than credit cards. If so, prioritize erasing over cards.