There are some great credit card deals available offering interest-free periods on balance transfers and purchases. With an increasing number of households struggling to make ends meet each month because of rising living costs, such products can offer a financial lifeline. However, unless you understand exactly how these cards work, you may find yourself racking up interest that you weren’t expecting. Steve Willey explains the catches…

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Community

Interesting however what people also need to be aware of is the interest rate following a period of 0% interest on a credit card. My wifes Virgin card charged 29.9% after her interest free period was over! Obviously we paid this off by using a balance transfer on my MBNA card but just found out they intend to charge 26.9% at the end of the interest free period. The lesson here is to confirm the rate you will be charged when negotiating a 0% deal!

I have had a Tesco credit card for many years and always pay off the full balance every month. I read a publicity flyer for their interest free balance transfer for 6 months with 2% transfer fee. I immediately transferred a balance from another card. There was already a balance owing on my Tesco card for previous purchases. As usual I paid the balance in full for the purchases but Tesco used this amount to reduce the balance transfer and charged me interest on the purchases. So as well as never using a card with a balance transfer on it for purchases also only do a balance transfer to a card which has no purchases already existing on it. I complained to Tesco as I felt the explanation of the 'payment hierarchy' was ambiguous. After negotiation with Tesco and via the Financial Ombudsman Service Tesco finally repaid me the interest charged.