Balance Transfer Credit Cards

What are balance transfer credit cards?

As we know, a credit card has many features. As per the feature of the credit card a borrower may transfer his funds from one card to another to make the payment. Hence, this process of transfer is balance transfer. Also, such credit cards are balance transfer credit cards. In balance transfer credit cards, a borrower utilizes the credit limits of all the cards. In fact, he may wisely make the funds transfer from one card to another right before the due date. Overall, this helps the borrower to rotate his funds without paying high fee and charges. So, the virtual credit limit of the credit cards works like the real money. By doing such transfers, again and again, the bank may increase the credit limit of the borrower later. As a result, a borrower feels stress-free after managing his finances.


How do balance transfer credit cards work?

Apparently, a balance transfer is a facility of a credit card given by the bank. Also, it is not evident that you will get balance transfer facility in all the credit cards. In fact, it may be there or it may not be. So, to utilize a balance transfer facility, a borrower should confirm the bank about it. As a result, if the bank approves a balance transfer to the borrower, a customer may use this service. On the contrary, there are charges applied by the bank for taking this service. In fact, the borrower should inquire about all the charges before using this service. Whatever the amount you transfer in another credit card. That will be the due amount for the credit card bill.  You may pay it before the due date to avoid late charges.


Lower your debts with balance transfer credit card

There are a lot of people who use several credit cards. When you use a number of these credit or store cards you can end up in a big pile of debt. The interest rates on cards are usually high up to 25-35%. So you can use a balance transfer credit card to cut out on some of the debts. All you have to do is transfer your high interest rate credit card to a cheaper credit card with a low interest deal. By doing this you can easily lower your interest rates, in some cases it can 0 with a 0% transfer card.

balance transfer credit cards

However, your card issuer can set a limit on the amount of money which you can transfer. But this doesn’t stop you from moving your debts if you stay in your transfer limit. Mostly the issuer lets you transfer about 95% of the credit limit to your new card.

Know how you can get guaranteed bad credit loans for small expenses.

Why are balance transfer credit cards so popular?

Seems like, every credit card holder uses a credit card because the credit limit helps us to manage finances. In a few cases, the card user extends the limit by using more cards. So, he may manage this by transferring funds from one card to another. Although it charges a fee to transfer the balance yet it is nominal and less than late charges. Therefore, to use the credit card smartly, a balance transfer facility is worthy. Likewise, this transfer can take place from another to some other credit card. Hence, the balance transfer credit cards help the credit card users to manage their funds. Also, if you use this facility properly, you may not need to borrow small loans for your sudden needs.


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How much deposit do I need for a mortgage?

Credit Report

What Is a Credit Report?

A credit report is a report of one’s financial transaction which calculates the risk for any debt. In the UK, it shows the credit history for all the taxpayers. In fact, there are agencies which pull reports for all the individuals. These companies are known as CRAs i.e. Credit Reference Agencies. This report has all the details about all your debts and credits from your financials. In fact, the details of saving accounts, credit cards, dues, pending include in this. This report keeps changing as per your every financial transaction. Most of the lending institutions, banks, and lenders check your report before lending.

If you have a good credit score on credit report you can borrow GUARANTEED LOANS from any UK lenders


How Can You Improve Your Credit Rating in Credit Reports?

As we know, there are three credit reference agencies EXPERIAN, EQUIFAX and CALLCREDIT. Hence, these agencies keep tracking the credit histories. Most noteworthy, if there is a bankruptcy or insolvency in any profile, it shows for 6 years there. These credit agencies are bound to share reports and they charge £2. Also, we can pull a written copy of this credit report. Similarly, we can pull it online too. As discussed, if we keep paying our dues on time, we can improve our credit rating. Every lender performs a credit check before lending money. You should avoid getting your credit checks every now and then because it pulls down your scores which can ruin your credit rating.


How Does a Credit Report Help You?

A credit report is a tool which helps a lender to decide a risk about the borrower. Also, it decides the limit of a loan amount a borrower can borrow. In fact, it decides the credibility that how an individual has been in his transactions during his life. There are changes which occur with every debt, due and financial transaction. Credit scores are the deciding factors for borrowings and loan limits. As per the UK government, credit reference agencies are entitled to check credits.


Benefits of Credit Reports:

  • Generally, this report is a document of transactions of an individual. that has many advantages. Like
  • A lender gets to know the exact state of the borrower. While he uses this report to lend money further.
  • It gives an idea to the applicant that where he stands with his credibility.
  • A report helps to understand the financial health of a business, company and an entity.

Therefore, if you want to get to know about your report now, you may take the help of any of the three agencies.


How Much Can I Borrow in Hire Purchase?

Hire Purchase

Hire Purchase (HP)

Hire purchase is a car finance in which you can buy a car. You have to pay an initial deposit upfront and the rest of the amount is spread over a time duration until you pay it in full. In hire purchase, the deposit amount is usually 10% of the car’s value.

When you have done with your final monthly payments, and the settlement payment you get to be the legal owner of the car.


Working of Hire Purchase

When you go to buy a car, you can get a hire purchase car finance from the finance company or the dealer itself.

Whenever you go to buy a car your first step would be to choose a car of course. After that, you have to make an initial deposit (10 % of the car value). You can negotiate the deposit amount with some dealers, but mostly it is fixed and usually low. The rest of the car value amount is then spread over a time period which you need to pay in monthly instalments. The interest rate is fixed and does not vary.


How Much Can I Borrow in Hire Purchase?

“How much can I borrow for a car?” is the question that you need to ask yourself. This will help you to manage your financial spendings according to it. There’s no fixed amount when it comes to borrowing money for a car. It depends upon credibility and the value of the car that you want to buy.

Having a good credit score can help you to borrow a large amount for that dream car of yours.


hire purchase

What If I Miss My Monthly Repayments in Hire Purchase?

If you are having difficulty making your repayments, you can talk with your lender regarding it. They may come up with a solution which helps you to make repayment of the outstanding amount over a set period of time. This will help you with your monthly expense and also make your repayments affordable. The lenders may also come up with a new repayment agreement or extend your current agreement.

However, this is not the case always, if you miss your repayments for several months your car can be repossessed. Your car can be repossessed if you have paid less than one-third of the hire purchase price if you have paid more than that the lender can’t take away your car without any legal action.


Advantages and Disadvantages of Hire Purchase


  • The deposit amount is normally low for hire purchase
  • The monthly repayment amount and the interest rates are fixed
  • You don’t have to pay a final settlement payment to own the car at the end of your contract
  • You can also return your car before your contract if you have paid half or more than half of the car value



  • You don’t get to own the car till you have made all the payments
  • If you miss your monthly repayments for a few months you can lose your car
  • Selecting a short-term deal can end up being costly for you


Read more:
Where can I get a personal loan with bad credit?