Save big with new deals on credit cards
You could make a lot of savings if you shop around for a new credit card deal that actually lowers the interest rate you pay to below the 15,5percent prime rate, Paul Beadle, managing director of www.justmoney.co.za, says.
Nedbank is offering consumers a low interest rate of 11,90percent for 12 months when they transfer existing credit card and store card balances to a Nedbank credit card. The deal is available to existing Nedbank customers moving a non-Nedbank product, or for first-time Nedbank applicants.
On the other hand, American Express will only charge 9,90percent for the first six months for balance transfers to its credit card.
But Beadle warns that, though the deals offer great value, consumers should read the small print.
"The interest rates are very low, but only apply to the balance transferred from an existing credit card or store card," he explains.
"New purchases will be charged at the standard debit interest rate, which could be higher than other credit cards in the marketplace."
Beadle says this is a cost-effective way to consolidate debts and pay them off.
Because the low rate only applies to balance transfers, Beadle says consumers should watch out as new purchases will attract the normal rate of the Nedbank card you choose, which could be as high as 23,90percent.
"If you spend more on the credit card, because the balance you transferred will be paid off first, the interest on your new purchases at the higher rate will quickly add up, so this could become expensive," he says.
Beadle warns that people who are struggling to pay their existing credit card bills should not look at the deals as a quick financial fix.
"Also, if payments are late, companies will withdraw the offer and switch to a more expensive rate," he warns.