The recent pronouncement that Virgin is offering a zero percent credit card has yet again introduced to our mind the situation of our finances.

So what is it offering? Well depending on which preference you opt for it offers you 0% on balance transfers for up to fourteen months and up to twelve months on any purchases. It without doubt appears inviting but is it a viable option. 12 months is a long time and the notion of not paying out interest for that duration of time is positively attractive. If we’ve got lots of Credit Card Debt shared out over numerous cards, then transferring them to a single card as a form of Debt Consolidation can positively be an plan.

One factor we really should try to remember is that even if we have no interest over the term, we have a rate incurred of 2.98 per cent of any balances that are transferred. By employing this Debt Consolidation technique we are better equipped to control our finances. We undoubtedly have more existing cash to repay that outstanding debt as a result of the lack of interest being charged. For example let’s say there is a £3,500 balance to transfer. It means we save £661 that should have been added as interest over the twelve months. This undoubtedly appears like a great Debt Management arrangement does it not?
Without a doubt it offers us a bit of breathing space to get ourselves back on an even keel.

However caution needs to be exercised as like any good deal there is always a catch. If we can’t repay that transferred balance in the twelve to fourteen months then interest will be charged. With the deal offered by Virgin the twelve-monthly rate is a gigantic 21.9 per cent on that balance, as well as any purchases we have made along the way will then be charged at 18.9%.

Hence if we really want it to work to our advantage then it is essential we budget to pay that off before interest starts adding to it. there is another downside to this great deal. Although it will undoubtedly make us feel our Credit Card Debt is improving, we may well fall into the trap of spending further, feeling safe with the guarantee that we needn’t have to pay interest on any of it.
Not only have we spent cash that may perhaps have been paying off that transferred balance but 12 months down the line we may find ourselves with further debt plus extra interest than before on the initial one.

We then have got to scrimp and scrape or look at further 0% deals to transfer to. Not a great Debt Management practice in the long run. Wouldn’t it be much better to get shot of it whilst we have this decent deal, or by the very least minimise it to the level our finances will permit?
So it is a great deal but only if we are sensible and won’t let temptation to lure us in the second we have an off day. Just think how exciting it will be to find yourself in 12 months time either debt free or that much closer than you could have been.

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