Shuffling the deck – can card jumping be bad for credit rating?

Once you’ve enjoyed the 0% honeymoon period with your credit card, the APR kicks in and interest payments start to mount. Smart credit card customers have been working the system by transferring the outstanding balance left to a new 0% offer, taking advantage of yet another interest-free period. By doing this a card-sharp customer can end up paying little or no interest on outstanding balances, actually paying off the loan rather than paying interest. But this practice has caught the attention of the card lenders, and they’re not happy about the system being abused.

Card jumping can affect your credit rating. It’s a common misconception that those who build up a debt on their credit card and pay high APR are the ones that are most likely to be rejected for future credit or have a poor credit rating. The truth is that the card companies love these customers, as the interest they pay keeps the credit card lenders in business. It’s the ones who attempt to beat the lenders at their own game by repeatedly taking advantage of 0% offers time and again that are at higher risk of ending up with a lower credit rating and a handful of potentially damaging rejections, lessening their chances of obtaining any kind of credit.

You can take much more control of your financial position by breaking through the mists of credit agencies and obtaining a copy of your credit report to see if card jumping has affected your rating. All three agencies in the UK will (for a small fee) send you a copy of your report so that you can see exactly what information is being held on you and, far more importantly, that it is accurate. The report will detail your financial history as well as other general information such as your address, occupation and income. If there’s even one small mistake it can damage your chances of getting credit of any kind in the future. Frequent instances of card jumping could be one of the things that hold your finances back.

Many credit card lenders have multiple outlets so ‘blanket’ application (applying to several credit cards at the same time in the hope that one of them accepts your application) is inadvisable, as it will be spotted straight away by the lender. A cluster of rejections can lead to ‘Black data’ being added to your credit rating, lessening your chances of obtaining credit in the future. Credit ratings are affected by many forces, both the mundane such as address and occupation, and the more complex, such as how you manage your money. How you conduct your financial affairs leaves a paper trail that is easily traced by credit companies who, in the current economic climate, are tightening their criteria for lending.

It is generally agreed that the best policy with 0% deals is to look for one that offers a long introductory period. This stops you from having to move your outstanding balance to another card every six months or so, thus reducing the chances of being labelled by lenders as a card jumper. There are offers ranging from nine to 16 months available, but read the small print as the longer offers may incur higher credit card balance transfer charges. By moving to a card with a longer 0% interest period, you can build up your reputation for customer loyalty, improving your credit rating in the process. It also gives you the opportunity to pay off a larger amount of the outstanding balance at 0% interest. If, at the end of the 0% period you transfer to a new card, the credit card balance transfer will be smaller and have more chance of being accepted by a new lender.

Juggling your finances to take advantage of 0% transfer offers between credit cards is a difficult (but not impossible) balancing act of reducing your costs whilst maintaining a good credit rating. If you abuse the system, it will catch up with you in the form of a poor credit rating and rejection letters. But if you use the system carefully and sensibly, you can benefit by cutting your payments and your debt considerably. There are plenty of very good offers for credit card balance transfers to 0% cards available. Check the comparison sites, as these offers are updated regularly with that latest offers.

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