Is Virgin’s Latest Credit Card Agreement A Life Saver Or A Risky Lure?

The recent pronouncement that Virgin is offering a zero percent credit card has yet again brought to our attention the state of our finances.

So what is it offering? Well depending on which option you select it gives you 0% on balance transfers for up to 14 months and up to 12 months on any purchases. It certainly appears appealing but is it a viable alternative. 12 months is a long time and the concept of not paying out interest for that duration of time is without doubt appealing. If we’ve got lots of credit card debt divided over numerous cards, then transferring them to 1 card as a kind of Debt Consolidation could surely be an suggestion.

One point we really should try to remember is that while there is certainly no interest over the term, there is certainly a fee incurred of 2.98 per cent of any balances which are transferred. Using this Debt Consolidation practice we are better equipped to control our finances. We definitely have more existing resources to repay that outstanding debt caused by the lack of interest being charged. As an 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 12 months. This unquestionably appears like an excellent Debt Management arrangement does it not?
Without a doubt it gives us a bit of breathing space to get ourselves back on an even keel.

Nonetheless caution should be exercised as like any good deal there is always a catch. If we don’t repay that transferred balance in the 12 to 14 months then interest will be charged. With the deal offered by Virgin the yearly rate is a massive 21.9 per cent on that balance, along with any purchases we have made along the way will then be charged at 18.9%.

Thus if we truly want it to work to our gain then it is important we budget to pay that off before interest begins adding to it. there is certainly an additional draw back to this great deal. Although it will undoubtedly make us feel our credit card debt is improving, we can 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 funds that could have been paying off that transferred balance but twelve months down the line we might find ourselves with added debt plus extra interest than before on the previous one.

We then have to scrimp and scrape or look at other 0% deals to transfer to. Not an excellent Debt Management method 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 degree our finances will permit?
So it is an excellent deal but only if we are levelheaded and never permit enticement to lure us in the moment we have an off day. Just consider how thrilling it could be to find yourself in twelve months time either debt free or that much closer than you may have been.