When market-leading 0% balance transfer deals aren't worth going for
Credit card companies are offering longer lasting 0% balance transfer deals, but they might not be the best deal for you.
The 0% balance transfer credit card market is heating up once again, with providers locked in a battle to offer the longest lasting interest-free deals.
You can currently pay no interest for up to 41 months on balance transfers.
However, in an interesting new twist, the cards that offer the best overall value don’t tend be those with the longest 0% period.
That's because fee charges on 0% balance transfer credit cards can make a big difference if you are tight on funds and trying to get back in control of your finances.
So they are worth keeping an eye out for when shopping around.
A practical example
Halifax and MBNA are the only two providers to offer a 41-month balance transfer, which puts them at the top of the best buy tables if you’re ranking by length of offer.
However, the Halifax card charges a 3.44% fee up front, while MBNA wants you to pay 3.45%.
If you transferred £2,500 to these cards, you would end up paying £86 and £86.25 respectively.
Just beneath them in the best buy tables, both Lloyds and the Bank of Scotland will give you 40 months interest-free but charge a fee of just 2.39%.
On these two cards you’ll pay just £59.75 on a £2,500 transfer.
Compare credit cards with loveMONEY
|
Credit card |
0% balance transfer period |
Fee |
Cost of transferring £2,500 |
|
Bank of Scotland Platinum 40-Month Balance Transfer Credit Card |
40 months |
2.39% |
£59.75 |
|
40 months |
2.39% |
£59.75 |
|
|
Sainsbury's Nectar Exclusive Long Balance Transfer Credit Card |
40 months |
2.42% |
£60.50 |
|
40 months |
2.69% |
£67.25 |
|
|
41 months |
3.44% |
£86 |
|
| MBNA Platinum 41-Month Credit Card | 41 months | 3.45% | £86.25 |
Finding the best deal for you
Choosing the right 0% balance transfer deal really depends on how long you need to clear your debt and finding the card that’s cheapest, rather than going for the headline best buys.
The easiest way to work this out is to calculate how much you can afford to pay back each month.
Larger debts will generally be better off on the longest lasting deal to minimise the size of the monthly repayments. But it’s worth exploring deals that sit near the top of the table that are perhaps are a month or two shorter to see if you can save.
Using the example of the longest lasting deals, I’ve factored in the fee that gets added to your debt when you shift a balance.
Here’s how much it would cost to clear a £2,500 debt within the interest-free period using one of the top 40-month and 41-month deals each month.
|
Credit card |
0% balance transfer period |
Fee |
Cost of £2,500 transfer |
Monthly repayment to clear debt of £2,500 + fee |
|
Bank of Scotland Platinum 40 Month Balance Transfer Credit Card |
40 months |
2.39% |
£59.75 |
£63.99 |
|
41 months |
3.44% |
£86 |
£63.07 |
As you can see going for the second best deal will save you £26.25 overall. You just need to be able to hand over £63.99 a month instead of £63.07, which is something most could probably stretch to.
The cheapest balance transfers
If you have smaller debts and are really confident you can pay them back over a shorter period there are cards with much cheaper fees and some that are even fee-free.
Read: The best low-fee and fee-free 0% balance transfer credit cards for more.
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