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Credit Card Shuffle Reduce interest without new credit

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A stack of credit cards You don't need new cards to slash the interest you pay. Lenders love you to apply for new plastic, but do the Credit Card Shuffle - using existing customer balance transfer deals - and you can cut 70% off the cost with NO NEW CARDS.

If you've got a decent credit score and just want to shift debt to a long term 0% deal, read the Best Balance Transfers guide.

What is the credit card shuffle?

The idea of the credit card shuffle is that you cut the cost of your existing cards, but without applying for any new ones. This requires being pretty savvy in managing your cash, but you can save up to 70% off the costs of your debts using this special technique.

While the most prominent balance transfer deals are at 0%, these are for new customers only. But if you call your existing card provider, they may offer you a low rate deal on the card you already have. If they do, this allows you to start transferring your debt around.

If you're paying debts at 18.9% APR, and you get a low rate deal for 6.9% APR, on a debt of £1,000 you could save around £120 interest in a year. So if you can't, or don't want to get new cards to balance transfer to, you can still save £100s off the cost of your debts.

Who is the credit card shuffle for?

Match up your circumstances against the Shuffle checklist. If any of the ticks apply to you, the Shuffle could be right up your street...

  • Do you get rejected for new credit?

    New customer offers are the cheapest option to cut the cost of debt, but often those most in need of cheaper credit don't get accepted.

    However, don't automatically assume you'll fail on application - though sometimes you'll be given a Low Credit Limit. There are techniques you can try and special cards you can apply for, even if you normally struggle to get a yes - read the 'Bad Credit' Credit Cards guide.

  • Do you want to protect your credit score?

    Applying for lots of cards, especially in a short space of time, hits your credit score.

    The Shuffle can - and should - be used in conjunction with new cheap debt card applications. It efficiently uses existing debts and means fewer cards are needed.

    For all the top deals, see the Best Balance Transfers and Best 0% Cards guides.

  • Can you always meet at least minimum repayments?

    If you consistently can't meet even your minimum outgoings, the Shuffle won't help you. Instead, see one of the free debt help agencies like Citizens Advice or StepChange Debt Charity as soon as possible.

    See the Debt Problems: What To Do guide for more details.

Watch the video guide
Filmed on 28 April 2011

Courtesy of Channel 5. Originally from It Pays To Watch! Jan 2009


How to do the Credit Card Shuffle

Step 1: Ask them to cut the rateNumber 1

Sometimes simply calling and asking for an interest rate reduction works. The credit card market is competitive and interest rate matching policies are common. If you've already got a cheaper rate on another existing card, this should help you batter them down.

Call up and say...

I need cheaper debt, but I'd prefer not to leave you

This works regularly, as special customer retention reps often have substantial power to authorise deals. For haggling hints and tips, read the full Haggling guide.

TwoStep 2: Shift debts around existing cards

Transferring a balance means you move debts to a credit card from another card for a fee of around 3%. For example, if you balance transfer to the Barkercard from the Corbettcard, in practice the Barkercard pays off the Corbettcard for you, so you now owe it the money instead.

The absolute best balance transfer offers used to be introductory deals for new cardholders, but an increasing number have existing cardholder offers too.

This means expensive debts sitting on a card can be cheaply moved across. A long-running example is Barclaycard's existing customer offer. They can shift debts to it at 6.9% (with a one-off 2.5% fee), lasting until the entire debt trans ferred has been paid off (see the Barclaycard loophole guide).

Check your card company's offer before calling

Some card companies have official set rates, others target individuals. It's important to be prepared before you make the call..

As the credit card market is competitive and providers want to retain their clients, customer service teams often have substantial power to authorise deals to keep you.

Check this list for possible existing customer deals from your credit card provider. Whilst these offers are not guaranteed for everyone, and they may change over time, you can get an idea of the type of deals on offer. Please let us know any deals you manage to get.

Balance transfer offers for existing customers

Card
Representative APR
Existing customer offer
Barclaycard
17.9% - 18.9%
Official response: Standard offer of 6.9% for life of balance, with a 2.9% fee.
Capital One
9.9% - 34.9%
MoneySavers' experiences: 4.9% for life of balance
First Direct
16.9% - 19.9%
MoneySavers' experiences: Nothing reported (let us know)
Halifax
9.9% - 17.9%
MoneySavers' experiences: c.6.95% for life of balance OR 0% for 9 months (3% fees on both)
HSBC
16.9%
MoneySavers' experiences: c.0% for six months (2.9% fee)
MBNA
16.7% - 17.9%
MoneySavers' experiences: 6.9% until repaid (2.98% fee) or c.10 months 0% (3% fee)
Nationwide
16.9%
MoneySavers' experiences: Nothing reported (let us know)
NatWest
16.9% - 18.9%
MoneySavers' experiences: Standard offer of 0% for c.9 months, 3% fee
Post Office
16.9%
MoneySavers' experiences: 0% for c.9 months, 2.98% fee
RBS
16.9% - 18.9%
MoneySavers' experiences: Standard offer of 0% for c.6 months with 3% fee.
Santander
17.9%
MoneySavers' experiences: Nothing reported (let us know)
Tesco
16.9%
MoneySavers' experiences: c.1.9% for 6 months (2.5% fee) or 7.9% until repaid (no fee)
Virgin
16.6% - 18.9%
MoneySavers' experiences: 6.9% until repaid (2.98% fee) or c.9 months 0% (3% fee)

What you need to do...

Simply call up your card provider and ask the following questions:

What's the cheapest APR you'll give to move debts from other cards?

What is my current outstanding debt?

What is my current credit limit and can you increase it?

Even if there's no special offer rate or increased credit limit, you could still save.

At this point, it’s important to take stock of the situation and note down all your debts in a list. To help, we’ve prepared a simple worksheet for you to make it easier.

Note down all your debts in the worksheet, including your overdraft as it's quite possibly more expensive debt than your credit cards.

If you want to factor in personal loans too, that’s fine. But be careful as sometimes switching loans to a cheaper interest rate can perversely mean you pay more! Read the Cut the Cost of Existing Loans guide before doing so.

Crucially, also include any new credit you've managed to open, or are considering, so you can work out how to make the debt cheapest. This should free up space to make the shuffle work more effectively. Find the details of the cheapest new card for you in the Best New Balance Transfers guide.

Shift the debt to where it’s cheapest

The aim here is to take advantage of the new and existing customer balance transfer offers. This takes a little bit of planning, but the second section of the Credit Card Shuffle Worksheet should help you decide what to do before putting it into action.

Even if special rates aren't available, shift the money to cards with the cheapest standard rate. A drop of just a couple of percentage points can make a major difference.

This simple example should help:

Example pre-shuffle situation

Card name
Current interest rate
Current debt
Credit limit
Special balance transfer?
Johncard
14.9%
£1,500
£3,000
none
Paulcard
16.9%
£0
£3,000
0% for 6 months
Georgecard
19.9%
£500
£2,000
none
Ringocard
17.9%
£5,000
£5,000
none

At this point, the total debt is £7,000, at an average interest rate of 17.4%.

The obvious start point is the 0% for 6 months on the Paulcard, and the aim should be to shift the most expensive debts there, up to its credit limit. So balance transfer the £500 from the Georgecard onto the Paulcard.

There’s then £2,500 left of the Paulcard credit limit, so move the debt from the next most expensive interest rate, the Ringocard. This leaves £2,500 on the Ringocard. While the Johncard doesn’t have a special offer, its standard rate is cheaper than the Ringocard, and with £1,500 left on its credit limit you can shift some more there.

Post-shuffle situation

Card name
Interest rate
Current debt
Credit limit
Johncard
14.9%
£3,000
£3,000
Paulcard
0% for 6 months, then 16.9%
£3,000
£3,000
Georgecard
19.9%
£0
£2,000
Ringocard
17.9%
£1,000
£5,000

The average interest rate has nearly halved from 17.4% to just 9% for the first six months, saving £300 in interest over that period. After that, the rate will increase to an average of just under 16%, but lower interest in the first six months will mean more of the repayments have gone towards reducing the actual debt rather than paying the interest.

Plus there’s nothing stopping you shuffling again at that point to keep things cheap, and it’s perfectly possible another company may then be willing to offer you cheap debt.

Step 3: Repay most expensive debts first

This is possibly the most crucial part of the entire shuffle. So important, in fact, I'm going to shout...

Start repaying, focussing as much cash as possible on the most expensive debt first.

This means you should pay just the minimum repayments on all other, less expensive, cards, and throw all spare cash at the dearest to pay it off. Once it's repaid, shift focus to the next highest rate card and continue this until you're debt-free.

This focussing quickly reduces the interest you pay, even if none of the other steps work.

Do include your overdrafts though. With an 18% overdraft and 13% credit card, you're better off spending on the card, paying just its minimum monthly repayments, and using all your income to reduce the overdraft, as it's more expensive.

What if you've debts at different rates on one card?

If you balance transfer to a card at a special cheap rate, but already hold pricier debts on it, the provider biases your repayments towards the higher rate debts first. This is good, as it means the most expensive balance disappears first (it used to be the other way around).

However, it means to get the absolute most out of the shuffle, there are a couple of extra steps.

  • Only focus repayments until the expensive debt's repaid

    Once you've done the shuffle, and you know the priority with which you should pay off each lump of debt, make sure you stop once all the expensive layer is gone.

    An example will help illustrate this...


    Ivor Debt has an Osbornecard with a £3,000 balance at 12.9%, and a Cablecard with £1,000 at 19.9% and a further £2,000 at 0%.

    He should first focus on paying off the £1,000 at 19.9% on the Cablecard, but once that's done switch his big repayment to the Osbornecard's 12.9% debt. Then once the £3,000 is fully repaid, focus back on the 0% debt on the Cablecard.

  • Advanced tip - move existing debts away, then back again

    If you've got enough spare balance on other cards, then you can take full advantage of any special balance transfer deal by moving all the debt off the card. Then once it has cleared, shift it back again (along with whatever other debt you intended to move to the card). This means as much debt as possible is at your new, lower rate.

    There may be balance transfer fees which could wipe out the gain, so be sure to check before you try this. The only danger here is credit card companies do have the right to stop you moving the money back. This rarely happens, but you should be aware of this.

The size of the saving

With normal debts of £3,000 on Angelinacard, £2,000 on BradCard and £1,000 on a store card, the average interest rate is 18.5%. Repay £300/month and by the time you've cleared the cards in full, the interest totals £1,140.

Yet shuffle as much as possible onto Angelinacard's 6.9% existing customer offer and the rest to BradCard at 12.9% and then repay the most expensive debts first. Then the average interest rate is reduced to 7.9%, meaning the interest is only £390, around a third of the cost.

£6,000 debts repaying £300 per month until repaid in full

Card
Credit limit
Pre-shuffle
Post-shuffle
Interest rate
Debt
Total interest (1)
Interest rate
Debt
Total interest(2)
Saving
Angelinacard
£5,000
18.9%
£3,000
£570
6.9%
£5,000(3)
£360
-
Bradcard
£5,000
12.9%
£2,000
£250
12.9%
£1000
£30
-
Storecard
£2,000
29%
£1,000
£320
29.9%
£0
£0
-
TOTAL
Avg rate = 18.5%
£1.140
Avg rate = 7.9%
£390
£750
(1) Debt repaid in proportion to initial balance (2) Repaying most expensive debt prioritised
(3) All debt now balance transferred; to do this, it was moved off the card and returned

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