Switch the balance of power

We've all heard the saying that if something sounds too good to be true then it probably is, so it could be argued the prospect of paying no interest on debt we've run up on our credit cards fits nicely into that category.

Above:On removing his head from the sand, Oli the ostrich was keen to secure a zero per cent deal.

However, a great many consumers are missing a trick by paying banks and building societies colossal amounts in unneeded interest.

As a nation we are predicted to pay £9 billion in unnecessary credit card repayments in 2009, with less than one in four of us utilising one of a number of zero per cent deals on the market.

And despite the fact that almost half of us have carried around debt on our cards for over a year, just one in five have any plans to transfer this balance to a zero per cent card.

There will be people out there happy to pay the minimum amount required each month, but at a time when all but the very richest of us should be looking to clean up our finances, it is worth looking at what is on offer.

I should know; until recently my thinking was the same. I viewed my monthly credit card payment as a minor but necessary irritation, a bit like my membership for the gym, which I frequent about as much as MPs stay at their second homes.

However, having been cajoled into action by my colleagues, it became apparent that at my current rate it would take more than a decade to pay off my debt! That's more than ten years to pay off a small sum (less than £500) on a card that has not been used in a year.

Furthermore, the total paid back would easily exceed £1,000 - more than double the card's limit. I'm all for helping out our lenders in this time of great need, but that is ridiculous.

By switching the existing balance to a zero per cent offer and doubling the paltry amount I was paying a month, I can now look forward to clearing the balance in less than 18 months, provided I resist using it for purchases. That's not to say these cards are for everyone; if your intention is to continue spending then a better option might be transferring your existing balance to a card that offers a low rate for your existing balance as well as future purchases.

Consumers should also beware of rate hikes after the initial offer period has finished, although there is nothing to stop you applying a balance transfer to another lender's zero per cent card.

The typical charge of 3% of the balance on transfer is also worth consideration. Even a small chunk of £5,000, for instance, will have an impact.

However, if you are confident you can pay off your balance within the period when zero per cent is on offer (set up a direct debit or standing order that ensures this - this also lessens the chance of defaulting on payment) then these cards are worth a look.

The key is viewing them as a means to clear, rather than accrue, debt.

James Henderson is a reporter at Moneyfacts Group