Switching around your finances As you may have read in our other articles, switching your finances around can often be quite beneficial to take advantage on the promotions companies use to attract new customers. Some very good rates can be found on products which can save you money if you take the right approach.
Some of the products you may consider switching with include:
Credit Cards With Introductory Offers
These are by far the most popular products to switch around with. With no tie in fees or penalties of any kind (in the majority of cases), people are free to switch from deal to deal, however they see fit. This means chasing of the latest deal or offer on the current one runs out.
For example a common practice to attract new customers is the 0% interest for six months deal. This is something which quite a number of credit card companies offer. Therefore cardholder can switch from one company to another, after their six month period has ended – to always stay on a minimal rate. However the ‘ride’ will end once they have exhausted all their options having taken out every card which offers this service. When these introductory offers are coming to an end it may be prudent to apply for a new 0% balance transfer credit card offer to save any interest that will accrue on this balance. This technique is known as 'credit surfing' or for repeat switchers you could be labeled as a rate tart.
Other switches to make – Debt Consolidation
Another type of switch you can make is switching from credit card debt to perhaps taking out a loan. Often you can obtain loans for a cheaper annual percentage rate than credit cards, which can save you money over time.
The ideal type of loan to take out and ‘switch’ or consolidate your debt in this manner is one which is ‘secured.’ This means your house is put up as collateral for the debt. Because of this added security, rates will often be more competitive than for loans without security.
Security
The concept of security can often be hard to grasp so we will provide a basic outline:
If you borrow money the lender needs to know you will pay this back. If you are a tenant, for example, you do not have a major asset that can be sold in the event that you cannot pay off your borrowings. Thus it is riskier for the lender. This risk means they may charge more for the service of lending money.
However if you have a secured loan, with the debt secured on your property, if you fail to pay the lender they can sell your property to make back the money you owe them. Because of feature, it is safer for the lender and thus, they may charge a reduced rate than unsecured finance
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