Over recent years, with more and more credit cards coming onto the market, many people have started to switch their credit cards on a regular basis in order to try and avoid paying interest on their borrowing. For many savvy, organised individuals this is a method that has proven successful in terms of saving them money on their borrowing, but it seems that the global credit crunch may have signalled the end for rate tarts.
Prior to the credit crunch switching from one 0% balance transfer card to another didn't appear to be much of a problem for the organised rate tart, providing he or she stayed on top of expiry dates of special offers, so that the next card could be applied for in plenty of term for the transfer to be performed before interest started to be charged. However, rate tarts are now finding it increasingly difficult to perform this process, with credit conditions now tighter than ever.
The first problem that many rate tarts may hit is that fact that lenders in all sectors, including credit cards, have really cut back on their lending levels, and are being far more cautious about who they lend to. Many applications are being rejected by credit card companies, and rate tarts may find that it is far more difficult to get a credit card than it was a year or so ago.
A second problem that rate tarts may face is the expense of transferring their balance. In the past there were a number of cards that offered capped balance transfer fees, so you always knew the maximum amount that you would have to pay to transfer your balance. However, the number of cards offering capped transfer fees has more than halved over the past year, which could make it increasingly expensive for rate tarts to operate.
You also need to be more careful than over about making multiple applications for credit cards, as this could make a mess of your credit profile, which will make it even more difficult to get a credit card - or any other form of finance - in the future.
