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Egg Credit Card Balance Transfer: Great Deal or Trapdoor Scheme?

Egg credit card is no longer available to customers who don't already have an Egg card. But, if you recently received a credit card from Egg you'll notice the enticing 0% on balance transfers before April 2011 up to March 2012. Egg credit card balance transfer has always drawn customers in with its 0% interest rate and average 16% APR afterwards, but it's not as straight forward as that. Like any other finance company the ideal situation is to keep a customer paying money for as long as possible, so there's a catch.

 

Anniversary Offer

Egg has two credit cards, the normal card and the Egg money card. In this instance we're referring to the normal credit card, which offers an anniversary deal for the first and second year of 0% on balance transfers. This means you can transfer existing debts to your Egg card and pay the debt off without any interest. There's only a 2.5% balance transfer fee, which all sounds quite good on the surface. But, despite the two year anniversary offer, the 0% balance transfer is only good for five months. After five months, you pay 16% (on average) of interest for the debt.

 

Biased Payments

Egg credit card balance transfer is brilliant if you want to pay off small debts without interest in a few months. But then you have the classic "minimum" payment issue; if you're offered to pay so much for month you're not likely to pay off your debt quicky, unless you're money savvy. Most people transfer multiple debts to their Egg card and, when they start paying off the amount, Egg biases payments against the cheapest debt first, effectively keeping the largest debts on the card for longer so they're more likely to incur interest after the enticing free period.

 

2.5% Transfer Balance

Strangely, the 2.5% balance transfer for moving a balance to the Egg card is treated as a purchase. So when you're free period is up, you'll be paying 16% interest on the 2.5% balance transfer fee on top of the debt.

 

2 Year Period

You've got two years to take advantage of the five month free balance transfer. So, if you pay off your debt one year, Egg hopes in the next year you'll transfer a balance again, giving you a further five months to pay off the debt at 0% interest. You're not actually getting two years of 0% interest on balance transfers; you've got five months 0% on balance transfers available once a year for two years.

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