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Guide to Balance Transfer Cards

A guide to

By Nevena Mulyachka and Mark Todd
Nevena is moneyhelpline’s money expert, specialising in money products such as insurance, credit cards, loans and savings. Mark is one of the founders of energyhelpline and moneyhelpline. He regularly appears on BBC1 and Radio 5 Live talking about switching and saving.

Last updated on 1/12/16


Not all debt is bad but expensive credit card debt normally is. With the average personal debt in the UK around £3,000, if you hold this debt on a credit card with interest rates often ranging between 15-30%, you end up paying a fortune in interest costs - on a £3,000 debt at a typical 18.9% APR that would be £567 a year!

So how do you turn the tables on the credit card companies and make the market work for you rather than against you?

Balance transfer cards can be a real saviour here. Generally they offer a 0% rate on any debts you shift from another card for up to over 3 years and would often charge a small upfront fee (2-3%) or even no fee at all!

They are truly amazing if you want what is essentially an interest-free loan to pay off your credit card debt.

The sensible note: We do advise you though to use this breather on your credit card debt to pay off your debts rather than use it to spend more!


Types of balance transfer credit cards

Balance transfer credit cards with long 0% period

!50 imageThe longest 0% period on balance transfer cards at the moment stands at a whopping 41 months (Halifax 41mth Balance Transfer Credit Card) with 3.18% upfront fee. Several other products by Virgin, Bank of Scotland, and Lloyds closely follow with 40-41 months interest-free period for a transfer fee around 2-3%. These cards are a great option if your accumulated debt is large and if you need a longer time to clear it out.

Low fee balance transfer credit cards

!50 image If you don't quite need as long as over 3 years to clear your debt, then you might want to look further down the table. If you pick a shorter interest free period, you can get cards that charge you a smaller transfer fee or no fee at all!

Some of the top offers on the market include the Halifax 25mth Balance Transfer Credit Card with no transfer fee, the Tesco Bank Clubcard with 0% for 24mths and also no transfer fee, as well as the Sainsbury's Bank Nectar 33mth Balance Transfer Credit Card with only 0.64% transfer fee.


When choosing:

- Work out if you can clear the debt before the 0% deal runs out. Since 0% deals tend to see their rates rocket after the introductory period, it might be better to choose the cheapest long-term low rate if you know you can’t clear the debt within the 0% period.

- Always take into account not just the length of the interest-free period but also the transfer fee you will be charged to transfer the debt. If you don't need over 3 years, pick a card with a shorter interest free period which will charge you a smaller or no transfer fee.

- You may lose your 0% deal if you can’t repay at least the monthly minimum, and you may get put on a more expensive rate. Work out if you’ll be able to afford these monthly payments.


Card Image one

Once you’re in, follow the golden rules:

1. Don't spend on your balance transfer card - Don’t make purchases on cheap balance transfer cards as it normally won’t be at a cheap rate and although banks now have to put any repayments towards the most expensive debts first, you’ll only be able to avoid the interest on your spending if you pay the balance on the card in FULL (including your transferred balance). This means that even if you’ve paid off your purchases fully and are making your monthly minimum repayments, you’ll still be paying interest on them.

2. Always pay the monthly minimum payment and if you can, try and overpay since these minimum payments are designed to prolong your debts.

3. Try to clear your debt before the end of the interest free period. After this period ends, the interest rate escalates significantly. If you find yourself unable to clear and racking up interest costs, remember you can shift again to another 0% deal!


Card Image two


- Remember, you could get accepted for the card but not get the headline deal as lenders get to decide whether to loan you money based on your credit rating. The rates that they advertise are known as representative rates and as such, not everybody will get them. In fact, banks are obliged to give them to just 51% of their customers.

- If you pay a fee to switch a debt to a transfer card (2-3%), factor in the fee when working out how much you save. As noted earlier, these fees vary a lot so if you need less time to repay your debt, we'd advise you to look at the shorter deals on the market such as the 0% for 25 months from Halifax.

A link to our credit card comparison engine is below which includes a very wide range of the top balance transfer and other credit cards in the market right now. It starts with the longest 0% periods but scroll through the pages a little to find the lowest fees.

We hope this article saves you (or a friend or a family member in debt) a lot of money and helps you turn the tables on the credit card companies.



Credit Cards

 These guides are for informational purposes only and do not constitute advice. For best personal advice contact a financial adviser.

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