Barclaycard's cheapest ever balance transfer card is launched
The credit card market is getting competitive as two lenders announce falls in their balance transfer fees.
Two credit card providers have cut their balance transfer fees as competition in the market hots up.
Barclaycard has launched the Barclaycard Platinum Lowest Ever Balance Transfer card, which has a 12-month 0% balance transfer window and more importantly its lowest ever balance transfer fee of 0.9%.
Let's look at both in more detail.
Barclaycard's new card is an impressive one as it means customers signing up will pay a fee equivalent to 0.9% of the debt transferred. This works via a refund system. So you transfer your balance (within 60 days to be eligible for the refund) and you'll be charged a balance transfer fee of 1.2%. But you'll then receive a refund which will bring the fee down to 0.9%
This means if you were to transfer £2,000 of debt you’d only have to pay a fee of £18. Given that most balance transfer fees lie around the 2.5% mark this is a great deal. When looking at cost alone this is the cheapest balance transfer card you can get your hands on.
So if you have a big balance you need to transfer and you're confident you can pay it off in a year, the Barclaycard card is well worth looking at.
The next best are the NatWest and Royal Bank of Scotland Platinum Low Balance Fee cards, which both charge a 1% fee and have a 13-month balance transfer window. Next in line is a card from Fluid which gives you a 15-month interest-free window and charges a 1.5% fee, followed by an MBNA card with a 2% fee and 16-month window.
Although Halifax's 22-month card is not a market leading, it does give you almost two years to pay back the balance on the card.
Our comparison tables give a full view of the market but if you're looking at balance transfer cards with long interest-free periods, top of the tables is the Barclaycard 23-month Platinum card, which has a fee of 2.8%, followed the NatWest and Royal Bank of Scotland Platinum Extended Balance Transfer cards, which both offer a window of 23 months.
You can read a full rundown of all the latest deals in The best 0% balance transfer credit cards.
The pros and cons of 0% balance transfer cards
Interest-free balance transfer cards work by allowing you to move expensive debt over to a card which won’t charge you any interest.
It’s a great idea in theory but the main thing to remember is in order to use these cards effectively you need to make sure you pay off the debt within the balance transfer period. As soon as that’s over the card will move to an interest rate of anything up to 19.9%.
This is generally higher than most credit cards so at this point if you haven’t been able to clear your debt you could look to move the debt again onto another card. However, this ‘rate tart’ behaviour should really only be used as a last resort as there’s no guarantee you’ll be accepted for another credit card.