Card sharp - does card-jumping affect your credit rating?
Once that initial 0% interest period is over on your credit card, the APR kicks in and the charges start to mount up. Savvy credit card customers have been playing the credit card balance transfer game for some time now and taking advantage of a generous system. By transferring the outstanding balance to a new card with another 0% interest period, a clever customer can pay off an outstanding balance rather than seeing the monthly repayments vanishing in interest charges. But are the card companies waking up to this practice of card jumping, and can it adversely effect your credit rating?
Card jumping can affect your credit rating. It's a common misconception that those who build up a debt on their credit card and pay high APR are the ones that are most likely to be rejected for future credit or have a poor credit rating. The truth is that the card companies love these customers, as the interest they pay keeps the credit card lenders in business. It's the ones who attempt to beat the lenders at their own game by repeatedly taking advantage of 0% offers time and again that are at higher risk of ending up with a lower credit rating and a handful of potentially damaging rejections, lessening their chances of obtaining any kind of credit.
A credit rating has all the appearances of secretive whisperings between banks and credit card companies, but the truth is you can take control of your credit rating and improve the chances of being accepted for credit. By applying to the three credit agencies, you can (for a small charge) receive a detailed copy of your credit report. This will detail your financial history and give you the same information that the banks and credit lenders hold on you. This information can be inaccurate, so it's a worthwhile exercise to carry out just in case there are mistakes or errors that are directly affecting your credit rating. That rating can be directly affected by instances of multiple card jumps, so be prudent how you use the opportunities to transfer balances between lenders.
Many of the market leaders have more than one product on offer so multiple applications have a very good chance of being rejected. The lender isn't stupid - they will realise what someone who sends out multiple applications is trying to do. The chances are that person knows their credit rating may be poor and is probing the market, trying to find a lender that will let them slip through the net. A cluster of rejections on a credit history could send your credit rating through the floor, minimising any chance you had of cashing in on any 0% offers. This 'Black data' is added to your credit report for all the other lenders to see and you're left in the cold with no chance of transferring balances between tempting offers. How you run your financial affairs leaves a paper trail that can be easily followed by lenders back to a history that categorises you as a poor investment for the credit card companies. If you are going to transfer balances between cards, pick one that suits all your requirements and concentrate on that application, rather than attempting a scattergun approach.
It is generally agreed that the best policy with 0% deals is to look for one that offers a long introductory period. This stops you from having to move your outstanding balance to another card every six months or so, thus reducing the chances of being labelled by lenders as a card jumper. There are offers ranging from nine to 16 months available, but read the small print as the longer offers may incur higher credit card balance transfer charges. By moving to a card with a longer 0% interest period, you can build up your reputation for customer loyalty, improving your credit rating in the process. It also gives you the opportunity to pay off a larger amount of the outstanding balance at 0% interest. If, at the end of the 0% period you transfer to a new card, the credit card balance transfer will be smaller and have more chance of being accepted by a new lender.
Juggling your finances to take advantage of 0% transfer offers between credit cards is a difficult (but not impossible) balancing act of reducing your costs whilst maintaining a good credit rating. If you abuse the system, it will catch up with you in the form of a poor credit rating and rejection letters. But if you use the system carefully and sensibly, you can benefit by cutting your payments and your debt considerably. There are plenty of very good offers for credit card balance transfers to 0% cards available. Check the comparison sites, as these offers are updated regularly with that latest offers.
Card jumping can affect your credit rating. It's a common misconception that those who build up a debt on their credit card and pay high APR are the ones that are most likely to be rejected for future credit or have a poor credit rating. The truth is that the card companies love these customers, as the interest they pay keeps the credit card lenders in business. It's the ones who attempt to beat the lenders at their own game by repeatedly taking advantage of 0% offers time and again that are at higher risk of ending up with a lower credit rating and a handful of potentially damaging rejections, lessening their chances of obtaining any kind of credit.
A credit rating has all the appearances of secretive whisperings between banks and credit card companies, but the truth is you can take control of your credit rating and improve the chances of being accepted for credit. By applying to the three credit agencies, you can (for a small charge) receive a detailed copy of your credit report. This will detail your financial history and give you the same information that the banks and credit lenders hold on you. This information can be inaccurate, so it's a worthwhile exercise to carry out just in case there are mistakes or errors that are directly affecting your credit rating. That rating can be directly affected by instances of multiple card jumps, so be prudent how you use the opportunities to transfer balances between lenders.
Many of the market leaders have more than one product on offer so multiple applications have a very good chance of being rejected. The lender isn't stupid - they will realise what someone who sends out multiple applications is trying to do. The chances are that person knows their credit rating may be poor and is probing the market, trying to find a lender that will let them slip through the net. A cluster of rejections on a credit history could send your credit rating through the floor, minimising any chance you had of cashing in on any 0% offers. This 'Black data' is added to your credit report for all the other lenders to see and you're left in the cold with no chance of transferring balances between tempting offers. How you run your financial affairs leaves a paper trail that can be easily followed by lenders back to a history that categorises you as a poor investment for the credit card companies. If you are going to transfer balances between cards, pick one that suits all your requirements and concentrate on that application, rather than attempting a scattergun approach.
It is generally agreed that the best policy with 0% deals is to look for one that offers a long introductory period. This stops you from having to move your outstanding balance to another card every six months or so, thus reducing the chances of being labelled by lenders as a card jumper. There are offers ranging from nine to 16 months available, but read the small print as the longer offers may incur higher credit card balance transfer charges. By moving to a card with a longer 0% interest period, you can build up your reputation for customer loyalty, improving your credit rating in the process. It also gives you the opportunity to pay off a larger amount of the outstanding balance at 0% interest. If, at the end of the 0% period you transfer to a new card, the credit card balance transfer will be smaller and have more chance of being accepted by a new lender.
Juggling your finances to take advantage of 0% transfer offers between credit cards is a difficult (but not impossible) balancing act of reducing your costs whilst maintaining a good credit rating. If you abuse the system, it will catch up with you in the form of a poor credit rating and rejection letters. But if you use the system carefully and sensibly, you can benefit by cutting your payments and your debt considerably. There are plenty of very good offers for credit card balance transfers to 0% cards available. Check the comparison sites, as these offers are updated regularly with that latest offers.
About the Author:
Paul Dury is a financial expert who writes articles for various financial-based websites. If you would like to learn more about a credit card balance transfer you can read more here.
posted by Credit Counseling at
10:43 AM
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