Price comparison website, Moneysupermarket.com, has calculated that an average household could make £270 by performing a simple, and entirely legitimate, credit card trick.
Many credit card providers, who are voraciously competing with each other for market share, are offering 0 per cent interest on balance transfers and purchases, often for a period of up to 12 months.
The trick involves using the cards for spending on everyday items such as food, petrol, clothes and recreation. The consumer website has estimated that the average household spends £1,930 a month on these expenses. If you were to use a 0 per cent credit card to pay these bills, and put the money you would normally spend in a competitive savings account, you could make an extra bit of cash out of your bank!
The figure of £270 is arrived at by investing the usual maximum credit limit of £6000 (or £1930 over a three month period) into a high interest bank account yielding 6 per cent. After 12 months, the customer can withdraw the £6000 to pay off their credit card bill (having accrued no interest on the amount) and pocket the interest that the cash has earned sitting in a savings account. Many current accounts are paying high interest rates on amounts up to £2500). (see www.banking-guide.org.uk for more information).
This trick is only worth contemplating if, like two thirds of people, you can pay your credit bills regularly at the end of the month. The benefits of this scheme would be completely negated if you were caught out and started paying interest on the £6000 because you were unable to pay the amount off after 12 months.
You could extend the duration of this profitable consumer enterprise by changing your credit card provider after the 12 month interest fee period has elapsed, and repeating the procedure elsewhere. However, many of the major underlying operators, such as MBNA, don't allow this type of transfer.
Consumers should constantly be on the look out for ways to get the best value out of banks' willingness to compete. Rob Kenley, head of credit cards at Moneysupermarket.com commented: "Using a credit card with a 0% purchase offer and investing the equivalent amount of money in a savings or current account is an extreme case of banks paying us for our business".
There are currently 8 different credit cards which offer 0 per cent interest on purchases (before applying for them be sure to check the other particulars like typical APR, balance transfer rate and how long they are offering the 0 per cent on purchases):
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