In a previous post I mentioned moving as much credit card debt as possible over to a 0 percent balance transfer card as being key to helping you pay off your debt quicker. Today I’m going to share my pick of the best credit cards currently available with long 0% balance transfer periods together with a few tips to ensure you make the most of a promotional rate balance transfer (and don’t fall into any of the traps!).
What Are The Benefits of a 0% Balance Transfer Card?
If you are trying to escape debt generally the first piece of advice people will give you is to STOP USING CREDIT CARDS. Which of course is correct in the traditional use of credit cards – spending money you can’t afford! However, if you can you should certainly use credit cards to your advantage.
One of the ways you can do this and aid your efforts to pay off debt is to combine your credit card debt by transferring any existing credit card debt from high interest cards to a card which offers a promotional term where there is 0% interest charged on a balance transfer. The length of the promotional period varies by lender and card but generally you can find cards offering anywhere from 3 – 36 months.
Why Do Lenders Offer 0% Interest Balance Transfer Credit Cards?
The reason lenders offer these 0% balance transfer cards is fairly obvious when you stop and think about it. So they are letting you store your debt with them for months or even years for free. On the flip side think about the reason people take out a 0% balance transfer card… because they are already in debt. The lender offering this tempting promotional rate is hoping the debtor will go back to their old ways and either not pay off the debt within the promotional period. Or even worse (or great from the lenders perspective) you use that card to start spending.
What Should I Consider Before Applying For a Balance Transfer Credit Card?
0% balance transfer cards can provide a real lifeline for those struggling to reduce their debt and stuck in the minimum payment cycle with a large percentage of that payment just going to fighting off high interest rates. However there are a few things you need to be aware of before you decide to apply.
Do NOT Use a Balance Transfer Card for Purchases!
The absolute worst thing you can do, THE WORST THING, DONT DO IT, after transferring a balance over to a 0% balance transfer card is to use that card for purchases. Just don’t even think about it. Generally these cards will come with hefty interest rates on new purchases meaning you will be back in the same situation; paying off interest each month rather than the actual balance. Even worse most lenders will stipulate that any payments you make to the card will go to paying off the interest part first (the purchases) so you wont even be scratching the surface with your original debt transfer until any new purchases plus their interest are paid off.
Pay Attention to The Balance Transfer Fee
The majority of balance transfer cards will charge you a fee for moving your debt over from your existing lender (this is usually around the 2% mark). However there are some cards currently on the market that offer a fee free balance transfer. Generally there is a trade off between the length of the promotional period and the fee charged for the transfer. So make sure you have all the details before making a decision on which card to go for. If for example there is a fee free card that has only a 12 month promotional period, but you are confident that you can repay the debt within those first 12 months then that could be a good option for you. If however you think it will take you a couple of years to repay the balance then you would be better with a 24 month promotional period card with a small transfer fee (keeping in mind transfer fees are usually only around 2% of the total balance, whereas standard interest rates are usually closer to the 19% mark!).
Check Eligibility Before You Apply
It goes without saying that not everyone can have their pick of all the balance transfer cards available. So before you dive in and start applying for the card with no transfer fee and the longest promotional rate you need to do what you can to work out how likely you are to be accepted. As multiple failed credit applications negatively impact your credit score and could mean blowing your chances of getting the balance transfer card you need. There’s no 100% method to know you will be accepted as every lender is different and they all use various methods to decide if you are a suitable customer. However you can give yourself the best chance by using an eligibility checker like this one from MoneySavingExpert.com or this one from Uswitch. Be completely honest with your answers and it will provide you with a list of cards you are likely to be accepted for and which you will almost certainly not be accepted for. Again this isn’t full proof but it’s likely to b fairly close.
What Are The Longest 0% Balance Transfer Credit Cards Currently Available?
Longest 0% balance transfer card with no fee.
Currently the Santander ‘Everyday Credit Card’ is the card with the longest interest free period which also doesn’t charge a transfer fee. The promotional period is an impressive 27 months. After the 27 month promotional period any remaining balance will be charged at the standard purchase rate which is currently 18.9% APR.
Another card worth considering depending on the amount you transfer is the HSBC ‘Balance Transfer Credit Card’. It has a huge 32 month promotional period and whilst it does technically charge a transfer fee of 1.4% it also offers cashback of £25 for transferring a balance over £300.
So if for example you are only transferring £1,500 then the transfer fee would be £21. However the cashback is £25. So they are essentially PAYING YOU £4 for transferring over your balance! *If you are transferring any balance over the amount of £1,785 then the cashback amount no longer covers the fee so make sure you do your sums first. After the promotional period any remaining balance will be charged at the standard variable rate which is currently 21.9% APR.
Longest 0% balance transfer card for those with average or limited credit history
If you have an average credit score and are worried you may not have your pick of cards or you have a fairly limited credit history (although please use the eligibility checkers mentioned previously) then this Barclaycard ‘Platinum Card’ may be a good option for you. It has a 0% promotional rate of 18 months on balance transfers with a 2.99% transfer fee. So it isn’t the cheapest, however if you can’t get approved for the top cards then this is still a solid option. After the promotional period any remaining balance will be charged at a rate of 24.9% APR (according to their T&Cs this may be higher depending on individual circumstances) so it’s important to make sure you either clear the balance before the end of the promotional rate or make sure you transfer over to another 0% card before you start getting charged interest.
Longest 0% balance transfer card for those with poor credit scores
The Capital One ‘Balance Credit Card’ is a good option for those who have a poor credit score. They will even consider applicants who have previously defaulted on payments or have CCJs. However it only offers a 6 month 0% promotional period and charges a 3% balance transfer fee. Credit limits here are limited also, between £200 – £1,500, so should only be applied for if you have just a small amount of debt to shift. This is a last resort card is you are unable to get approved for the other card options mentioned.
*Updated October 2019.