Time running out to get cheapest interest-free credit card

If you want to take advantage of the lowest transfer fee around, you'll need to act now!

If you have some debt built up on a credit card, then the last thing you want to do is have to deal with interest charges on top - you want the money you pay each month to go directly towards cutting that debt!

One way to do this is by taking advantage of a 0% balance transfer card. As the name suggests, these are cards where you enjoy a period free from interest on debt you move over to the card, allowing you to demolish that debt in manageable chunks, without having to worry about interest. In exchange, you’ll have to pay a transfer fee of a percentage of the debt you move over, typically around 3%.

These cards currently tend to come in two forms – those which offer extremely low transfer fees, and those which offer extremely long 0% periods.

The battle of the 0% periods

Let’s start with the cards with the largest interest-free offers. A couple of years ago Virgin dominated the market, as it gave customers 16 months free from interest. Nobody else wanted to compete.

Two years on, and that has changed significantly – indeed, earlier this year you could get an extraordinary two years of 0% interest on a Barclaycard. While that offer has now been pulled, you can still benefit from a very, very long time in which to pay off your debt before interest starts to be charged.

Here are the top six cards in the market:

Obviously, which card is best for you depends on your circumstances, and the debt you need to pay off. If you don’t need 22 months in which to pay off the debt, it will probably work out cheaper to go with the Barclaycard 20 month Platinum, and pay a lower transfer fee.

Speaking of which...

The low transfer fee cards

Previously, card providers tried to outdo each other by offering ever longer periods free from interest. However, they’ve now turned towards the transfer fee you pay, with a number of providers offering some seriously low rates of less than 2%.

And it’s one of these deals which is coming to an end next week. Lloyds TSB’s Platinum card offers customers a 50% refund on balance transfers of more than £1,500, cutting the fee from 3% to 1.5%, the lowest in the market.

To give you an idea of the difference this can make, if you were to transfer over £5,000 before the discount ends, the fee would be £75. If you were to transfer it afterwards, that fee would double to £150.

However, if you want to take advantage, you have to apply for the card before 24th October - this coming Monday!

Here’s how the Lloyds TSB Platinum card compares to the other low rate cards:

The low rate for life cards

There is actually a third option. There is also a number of credit cards which offer a very small rate of interest on both balance transfers and purchases for the entire time you have the card, not just a couple of years. These cards are called 'low APR cards'.

The attraction is that you never have to pay a transfer fee. So if you have a massive debt, which will take years to pay off, this may be an attractive card as you won’t need to ship that debt around different cards every year, in the search of 0% periods but spending a fortune on transfer fees. This may also be a better option for borrowers with only small debts, who don’t need such a long time to clear the debt.

For a great guide to the cards on the market, check out The brilliant new debt-busting credit card

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