Transfer your credit balance for free

There's now a balance transfer credit card with a real difference - so does it knock spots off the rest?

A new balance transfer credit card has just appeared on the market - and a couple of its features really stand out. I’m going to analyse the pros and cons, so you can decide how it squares up to the competition!

The lowdown

The first thing to note is that MBNA Platinum card doesn’t charge a transfer fee for either balance transfers or money transfers, provided the transfer is made within 90 days of the account being opened. (If you make a transfer after this period, a 3% charge will apply to balance transfers, and a hefty 4% fee will apply to money transfers). So you can transfer your entire credit card balance for free!

The interest rate on the card is 1.9% APR for the first 12 months. Unusually, this rate applies to money transfers (for example, to loans and bank accounts) as well as balance transfers to other credit cards.

That means you can use the card to clear an overdraft or loan that’s charging a high rate of interest, then pay the card balance off at that low, 1.9% rate.

Just be aware that, after the 12 month promotional period, the typical APR on the card is 16.9% (variable).

The competition

Let’s take a look at some other top picks in the balance transfer market, to see how they compare.

0% contenders

At the moment, my favourite 0% balance transfer cards are the NatWest Platinum card, the Barclaycard Platinum card and the Royal Bank of Scotland Platinum card.

All three offer 0% balance transfer periods lasting 16 months (the longest available). However, each charges a transfer fee of 2.9%; and none of them allow money transfers to other loans or current accounts.

Money transfer options

If it’s a money transfer you’re after, your options are much more limited: Not many credit cards let you use them to clear other, non-credit card debts.

One of the very few cards that offers this facility is the Virgin Money credit card. You’re offered a 0% period of 14 months for money transfers - the same as that offered for regular balance transfers.

However, you’ll have to pay a hefty 4% transfer fee (2.98% for balance transfers).

More breathing space

If you’re not confident you’ll be able to clear your debts within 16 months, you should go for another option entirely. A lifetime balance transfer card offers a low rate of interest for as long as it takes to clear your balance, so it gives you some real breathing space to chip away at your debt mountain.

At the moment, the market leader is the Barclaycard Platinum Simplicity card, offering a variable rate of 6.8% with no balance transfer fee.

Outside the box

A different approach would be to switch current accounts, and find one offering a decent 0% overdraft facility. That way, you can clear any credit card debt using the overdraft, then pay the overdraft off before the 0% period ends.

For example, the Preferred Overdraft Rate account from Santander offers a 0% overdraft for the first 12 months (dependent on individual circumstances).

Just be aware that you’ll need to pay in at least £1,000 every month to qualify.

The verdict

So, could MBNA’s latest offering be right for you?

Here are some questions you need to ask yourself:

1. What’s my credit rating like? Credit has really tightened up in recent years, and now market-leading credit cards like this one are only available to people with very good credit scores.

If yours isn’t whiter than white, you might be better off finding a 0% overdraft instead.

2. Is a money transfer important to me? If you want to make a money transfer, I think MBNA’s platinum card offer is hard to beat.

It isn’t a 0% deal like the one from Virgin, but the hefty 4% fee Virgin charges still makes it much better value.

3. Do I already have an MBNA card? Transfers aren’t allowed from other MBNA cards, so if this is what you’re planning, you’ll need to go for one of the other options instead.

4. How long will it take to clear my debts? MBNA hasn’t put together this deal with charity in mind. Obviously the provider is hoping that some people won’t manage to clear the debt on their cards before their 1.9% period ends, so they end up paying a typical 16.9% APR on the remaining balance.

Don’t become a victim! If you think it’s going to take much longer than 12 months to clear your debts go for a lifetime balance transfer card instead; or at the very least one of the longer, 0% deals lasting 16 months.

Good luck!

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