For borrowers looking to cut the cost of their credit card debts, 0% balance transfers are a brilliant move.
Quite simply, 0% transfers allow you to shift balances from high-charging credit cards to those offering interest-free deals. Given that the typical credit card charges an average yearly interest rate above 19% APR, this is a great way to kill your interest bill.
Transfer fees
However, as the old saying goes, "There's no such thing as a free lunch" -- and this is certainty the case with 0% transfers.
In return for, say, up to 22 months of interest-free credit, you'll pay an upfront transfer fee. Typically, this is 3% of the transfer balance, which comes to £60 on a debt of £2,000. Even so, it's still well worth paying these transfer fees.
What's more, the longer the 0% deal and the lower the transfer fee, the better the deal. However, the longest balance transfers aren't always the best, because they all charge fees of around 3%. In some cases, choosing a shorter 0% deal with a lower fee produces the biggest saving.
Let me show you what I mean:
1. Seven long 0% balance transfers
Here are seven transfers offering 20 months or more of interest-free credit:
|
Card |
0% deal |
Transfer fee |
Purchase rate |
|
22 months |
2.90% (Min. £7.25) |
17.9% APR |
|
|
22 months |
3.50% (Min. £3) |
17.9% APR |
|
|
21 months |
2.60% (Min. £7.25) |
17.9% APR |
|
|
20 months |
2.99% (Min. £3.00) |
16.8% APR |
|
|
20 months |
3.00% (Min. £3) |
16.9% APR |
|
|
20 months |
3.20% (Min. £5) |
17.9% APR |
|
|
20 months |
3.20% (Min. £5) |
17.9% APR |
As you can see, the Barclaycard Platinum Extended Balance Transfer Visa offers the longest deal. For a fee of 2.9%, it provides a 0% transfer lasting 22 months. This fee works out at 0.132% a month, which is the second-lowest in my table.
However, the cheapest 0% deal in this table is offered by the Barclaycard Platinum Balance Transfer Visa, which charges 2.6% for a 21-month 0% transfer. This works out at 0.124% a month, just beating its stable mate into first place.
The remaining five cards all charge fees equivalent to between 0.15% and 0.16% a month, making them lesser bargains -- but great deals, all the same!
2. Three low-fee 0% balance transfers
Now let's find the 0% transfers with the lowest fees, to see how these compare:
|
Card |
0% deal |
Transfer fee |
Purchase rate |
|
5 months |
Nil |
22.9% APR |
|
|
16 months |
1.99% (Min. £3) |
15.8% APR |
|
|
16 months |
2.10% (Min. £7.25) |
18.9% APR |
As you can see, the Northern Bank (NI) Visa is unique, as it charges no transfer fee. Then again, its 0% deal lasts a mere five months, plus this card is available only to residents of Northern Ireland.
The Virgin Money All Round Credit Card charges a fee of 1.99% for a 0% transfer lasting 22 months. This fee works out at 0.124% a month, beating all seven cards in my first table.
The third and final 0% deal is from the Barclaycard Low Fee Platinum Visa. This charges 2.1% for 16 months, or 0.131% a month. However, a special refund offer reduces this fee to the equivalent of 1.6% for everyone. Thus, at just 0.1% a month, it wins the gold medal as the cheapest 0% transfer deal!
In summary, if you want the longest 0% balance transfer possible (and the least hassle), then choose one of the seven credit cards in my first table. Otherwise, if you want the best-value transfer deal, then choose one of the three cards in my second table. The choice is yours!
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