Britons have been given guidance on how to make 0% balance transfer credit cards work best for them.
Consumers seeking out 0% credit card deals should approach such products with caution, it has been suggested.
Writing in an article for lovemoney.com, Neil Faulkner points out that, despite their title, such credit card products can often prove to be more costly than borrowers may first think.
He states that although balance transfer credit cards do not charge interest over the duration of their 0% period, they do implement an upfront transfer fee of around two or three per cent on the entire balance owed.
As such, this charge can turn out to be as expensive as an ordinary credit card which - despite not incurring an annual fee - has an interest rate of around 11 per cent.
To illustrate this, Mr Faulkner points out those owing £1,000 on a 10.7 per cent credit card will be able to clear off their balance in six equal repayments, which sees the total amount of interest paid off standing at £30, with such charges falling steadily each month.
Meanwhile, those opting for a six-month 0% balance transfer deal charging a three per cent fee will have also faced a £30 charge by the time they have completed their repayments - although this comes in the form of a one-off upfront charge.
However, as they are "an extremely cheap way to borrow" there are a number of ways balance transfer borrowers can get to grips with their debts more effectively. One means of doing this, the writer notes, is to compare accounts in order to seek out longer balance transfer deals or lower fees.
He also suggests only making the minimal monthly repayments until the last month of the balance transfer period before clearing off the money owed. By doing this, instead of paying off regular amounts, he suggests these additional funds should be placed into a saving account to generate interest and then used at the end of the transfer deal to clear off what borrowers owe. Such a practice "effectively means you're earning interest on the money you're borrowing".
The advice on clearing credit card debt follows recent comments by Peter Sargent, president of insolvency trade body R3, that consumers should make clearing off their plastic their top financial priority.
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