The debt-busting card you've never heard of
The competition is heating up within the balance transfer market!
Many of us may be struggling with debt on our credit cards, but the balance transfer market has rarely been so competitive. What’s more, excellent cards are being launched by banks you may never have heard of.
Debt-busting with Creation
Creation Finance, part of the French bank Sygma Bank, is not a name that will be particularly well known to many of you. It certainly wasn’t to me. However, if you have debt on a credit card, it’s a name that it would be well worth you becoming familiar with!
The Creation Card is an excellent balance transfer card, offering a whopping 17 months free from interest on any debt that you transfer over onto the card.
What’s more, to do so will only set you back a fee of 2.9% of the balance you transfer, a very competitive fee compared to many leading balance transfer cards.
Not a market leader
It would be remiss for me to make out that the Creation card is the absolute best in the market. It isn’t. However, it’s more than a formidable option.
Here are the current top ten balance transfer credit cards:
|
Provider |
0% period |
Transfer fee |
|
20 months |
3.2% |
|
|
18 months |
3% |
|
|
18 months |
2.9% |
|
|
18 months |
2.88% |
|
|
18 months |
2.8% |
|
|
18 months |
2.8% |
|
|
18 months |
2.89% |
|
|
17 months |
2.9% |
|
|
17 months |
3% |
|
|
17 months |
2.95% |
As you can see, there are quite a few cards that offer a longer period free from interest than the Creation card. However, don’t be duped into thinking you have more options than you really do.
For example, the market-leading card from Barclaycard offers a frankly remarkable 20 months before you have to worry about paying interest. However, it does carry a far larger fee than the rest of its competitors. If you’re transferring a substantial sum, that extra fee on top will soon undermine the added two month benefit Barclaycard offers compared to the next cards in the table.
Rachel Robson takes a look at why you might be better off using a low interest credit card.
There are six cards offering 18 months interest-free. However, that is a little deceptive as while that represents six different brands, the cards come from just four different providers – RBS and NatWest are part of the same group, while MBNA is the firm behind Virgin’s card. And that means you won’t be able to transfer debt between them, further reducing your options should your existing debt be on a card from one of these providers.
No such worries on the Creation card. It won’t necessarily be the first choice for many of you. But it’s certainly an option worth considering.
A low rate for life
Of course, these 0% cards are not right for everybody with debt on their credit card. After all, if you haven’t paid the debt off within that 0% period, you’ll start getting whacked with interest. And if you want to transfer that remaining debt to a new balance transfer card, there will be another fee in the region of 3% to take into account.
Instead, a card offering a low rate of interest for life may be a preferable option. These cards typically don’t charge a transfer fee, instead levying a small amount of interest on your debt balance. Below are two of the best cards in the market today.
|
Credit card |
Balance transfer interest rate (APR) |
Transfer fee |
Purchases rate (APR) |
Other |
|
5.9% |
2% |
16.9% |
Money transfers also at 5.9% (2% fee). |
|
|
7.9% |
n/a |
7.9%
|
|
Clearly the MBNA rate is exceptionally low, but it’s worth remembering that it comes with a fee of 2%, and even that is only for transfers made within the first 60 days. Otherwise that fee will jump to 3%. You can find out more about these cards in The longest low rate credit cards.
A stress-free balance transfer
Of course, picking the right card for your balance transfer is just the start. There are a couple of other things you need to consider.
1. Getting accepted
The first time I applied for a credit card, I was rejected (despite the months of promotional emails from HSBC urging me to apply in the first place). At that point, I did a really daft thing. Nothing.
Related how-to guide
Pay off your credit card debts
How to destroy your credit card debt quickly and effectively.
See the guideI never found out why HSBC had said no, which was silly. Unless you know why a bank has decided to turn you down for credit, how can you know how to fix it?
Banks take all sorts of factors into account when performing a credit check on you, so it pays to keep on top of your credit score, and there are little things you can do to ensure the chances of being turned down are kept to a minimum. Be sure to have a read of What REALLY damages your credit rating.
2. Direct debits
Missing payments on credit agreements is a seriously bad thing to do. It can leave a nasty black mark on your credit record, making it even harder to get credit in the future. Not a smart move.
But it can also have an immediate financial cost too. There may be a late payment charge to pay, while card providers may also have the right to cancel your 0% deal on the spot. All that time spent picking the right balance transfer card, only to have the interest-free period disappear in a cloud of smoke.
The easiest way to ensure you don’t miss a payment is to set up a direct debit to automatically cover the minimum payment every month, though obviously paying more than that is a good idea if you want to actually clear that debt by the end of the 0% period.
More: Five tips for choosing a fantastic savings account | You have a week to slash the cost of new mortgage!
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