The best 0% money transfer credit cards: clear your overdraft


Updated on 23 February 2021 | 0 Comments

Want to clear your current account debt cheaply? A 0% money transfer credit card could be a great option. We reveal the longest money transfer deals currently available.

Overdrafts have recently become far more expensive for a lot of people, which is bad news for anyone who regularly dips into the red each month.

In 2019, the Financial Conduct Authority (FCA) demanded that banks use a simple, single interest rate for overdrafts and said they cannot charge people more for using an unauthorised overdraft.

As a result, most banks responded by announcing plans to hike their overdraft rates from around 20% EAR to nearly 40% last year.

That caused widespread outrage, with many critics questioning why it was about to become twice as expensive to borrow with your current account than with a bog-standard credit card.

The FCA responded by saying they would look into the matter but, after months of investigation, it revealed that banks can go ahead and roll out these rip-off rates.

Overdrafts: a terrible way to borrow

Banks and building societies made a frankly incredible £2.4 billion in profits from overdrafts in 2017 alone.

This tells you that borrowing with most current accounts is a costly mistake.

Sure, there are a handful of accounts that still offer cheap or free overdrafts on the market, but they're disappearing fast.

You could instead look into a 0% money transfer credit card if you want to avoid rip-off overdrafts.

These cards give you up to 18 months where you don't get charged any interest on your overdraft debt. That means your debt isn't getting bigger and your repayments become a lot more manageable.

If you've got credit card debt, consider getting a 0% balance transfer card instead.

What are money transfer cards?

These work by letting you transfer money from your credit card to your current account. Once you’ve transferred the money, you can use it to pay off your overdraft.

Credit card companies usually charge very high rates of interest on this sort of cash advance.

But 0% money transfer credit cards allow you to transfer money from your card at 0% interest for an introductory period.

This is very similar to a 0% balance transfer card. There are only two differences:

1. You’re transferring money from a credit card to a bank account, instead of transferring debt from one card to another.

2. The fee is often higher for a money transfer than for a balance transfer. Money transfer fees are usually around 4%, while balance transfer fees are typically between 1.5% and 3%.

Got an overdraft you can't shift? Read our guide to getting out of debt here.

The longest 0% money transfer deals

Unfortunately, the duration of the top money transfer cards has fallen dramatically from up to 41 months in 2017 to a maximum of 18 months this year.

Here are the longest-lasting 0% money transfer deals around:

Credit card

0% money transfer period (months)

Money transfer fee

Cost of moving £1,000

Representative APR after 0% period ends

MBNA Long 0% Money Transfer Credit Card

Up to 18

2.99%

£29.90

22.9%

Tesco Bank All Round Credit Card

Up to 15

3.99%

£39.90

20.9%

Virgin Money 20-Month All Round Credit Card

12

4%

£40

21.9%

If you’re interested in a balance transfer card (without paying a fee), check out: The best fee-free 0% balance transfer cards

All the above cards offer 0% interest for balance transfers (interest-free periods vary), but you’ll have to pay a fee.

Other options to clear overdraft debt

If a money transfer card isn’t for you, another option is to take out a low-rate for life credit card or, failing that, a personal loan. 

The rates on offer are significantly less than an overdraft or credit card, but you’ll only be accepted at this rate if your credit score is good. 

If your credit rating isn’t perfect, you may be offered a loan at a higher rate but if it’s below the amount attached to an overdraft then it is still worth going for.

In the long term, consider switching to one of the few bank accounts that offer a cheap or even interest-free overdraft – see the top options here.

We've also put together a full guide on how to get out of debt, regardless of how far into the red you are.

Still not found the right card for you? View our complete guide to credit cards to see all your options.

 

More on credit cards:

The best reward credit cards

The best cashback credit cards

The best 0% purchase credit cards

The best credit cards to use abroad

The best 0% balance transfer credit cards

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