Credit Surfing – What is it?
There has been a huge increase in competition in the UK credit industry. Offers that were unimaginable just a few years ago are now common place. US banks, alternatives to high street banks and Internet lending have all led to an effect whereby the UK lending market is practically unrecognisable from what it used to be. And naturally this is effecting consumer behaviour.
As the market landscape changes, and as more and more options and opportunities are opened to consumers, it is only natural that they adapt to these developments. One of these changes in borrower behaviour is the advent of the practice known as credit surfing. This takes the fullest advantage of lender offers possible.
How it works is suppose you have a three thousand pound balance outstanding on a credit card at twenty six per cent. The interest and finance charges on this will be significant. If you can switch this to another credit card that offers a low balance transfer rate for six months, you will be saving all that interest for the next six months. And when that six months is over, the idea of credit surfing is that you switch again to another credit card that offers a similar low interest balance transfer rate. This means you are taking full advantage of low balance transfer rates to save yourself literally thousands of pounds in interest and finance charges.
Many people wonder if credit surfing is worth the hassle. Well, there are a number of considerations you should take into account. First of all, is there a balance transfer fee and is the new rate significantly lower than your current rate. Obviously if you are moving from a twenty per cent rate to a zero per cent rate, and you plan on leaving the balance there for the entire interest free period, then it will be worth paying a balance transfer fee of one or two per cent. But this will not always be the case so make sure that you calculate in the cost of balance transfer fees when calculating if its worth your while to make a balance transfer.
Another consideration will be if it is worth the hassle. Well again this all depends on how much you owe and how low the new rate will be but many people can save at least a couple of hundred pounds by switching to a lower rate so in this sense it is worth it. Of course you should also ask yourself if maybe debt consolidation is not more appropriate.