We round up the best of the best balance transfer credit card options.
It seems that after a period in the doldrums, the 0% credit card market is becoming more competitive again. MBNA has just got in on the action and launched two new products, designed to take its rivals by storm.
But are they really the best of the best? And what do you need to be aware of if you’re going to make 0% cards work for you?
Two new contenders
Last week saw the release of the MBNA Balance Transfer credit card. This offers 0% on balance transfers for 16 months, with a 2.9% balance transfer fee.
It also allows 0% money transfers for 12 months, for the same transfer fee. This means you can make payments to clear non-credit card debts, like overdrafts or personal loans.
Finally, it offers 0% on new purchases for three months; and has a typical APR of 16.8% (variable).
MBNA’s other new product is the Dual credit card. This offers 0% for 12 months on both balance transfers and new purchases.
The balance transfer fee in this case is 2.98%; and - as with the other new card - it will also allow 0% money transfers for the same period and transfer fee.
The typical APR after this period is 18.9% (variable).
Positive developments
Another MBNA development worth flagging up is its decision to start operating a positive order of payment.
Rachel Robson explains how negative order of payment works and how to avoid it.
Previously, MBNA cards operated negative payment hierarchy. This meant the most expensive debts on a card (those charging the highest rate of interest) were cleared last; and customers paid higher interest charges as a result.
However, after pressure from consumer groups and the government, MBNA has finally done the decent thing: From this month, MBNA card repayments work on a positive order of payment, with the most expensive debts being cleared first. Hurrah!
How they measure up
So, let’s compare the new cards with some existing alternatives:
0% BT best buys
In this category, the MBNA Balance Transfer card comes out well. It has the joint longest % BT deal on the market, matched only by the Barclaycard Platinum Credit Card with Balance transfer.
This also offers 0% on balance transfers for 16 months (with a 2.9% transfer fee), 0% on new purchases for three months, and a typical APR of 16.9%. In other words, the deals are almost identical.
However, Barclaycard doesn’t allow money transfers. So while the card can be used to clear other credit card debts, it can’t be used to clear other interest-charging debts, like an overdraft.
This is why, in my opinion, MBNA just pips Barclaycard to the post.
Bear in mind, however, that MBNA operates a large number of different cards - many on behalf of other brands. For example, Virgin credit cards are in fact part of the MBNA ‘stable’.
If you already have one of the cards, you won’t be able to take out another. And in this instance, the Barclaycard might be your best bet.
All-in-one cards
The MBNA Dual credit card is designed to let you both transfer existing debts and run up new ones - at minimum cost to you.
Obviously this approach comes with a pitfall. After 12 months, the interest rate charged on both balance transfers and new purchase debt leaps to a typical 18.9% - so it’s crucial that you completely clear your balance before you’re hit with this whopping rate.
In this ‘all-in-one’ card category, the Dual card faces some tough competition. Two cards particularly stand out:
The Barclaycard Platinum Credit Card with Purchase offers 0% on balance transfers for 12 months (with a 2.9% fee) and 0% for 12 months on new purchases.
Not only is the transfer fee marginally lower than that of the Dual card - but at 16.9%, the typical APR is too.
And finally, this card is part of the Barclaycard Freedom reward scheme - so if you do spend on it, you’ll receive up to 1% Reward Money, to spend at hundreds of selected retailers.
The other main contender is the Sainsbury’s Credit Card, also offering 0% on balance transfers and new purchases for 12 months. The transfer fee is very slightly higher than MBNA’s at 3% - but the typical APR is significantly lower (15.9%).
Recent question on this topic
- nanouuu asks:
can i transfer my balance to my husband's credit card?
- s2ooz answered "Yes, quite simply. all that is requested is the numbers and the relevant security details. Easiest..."
- SoftwareBear answered "Why would you want to ? Do you need some help with debt ? Doesn't sound like a sensible solution..."
- Read more answers
Because of the lower fee and the reward scheme, the Barclaycard Platinum Credit Card with Purchase would be my top pick. That’s unless you’d like to do a money transfer, in which case MBNA comes up trumps again.
Just remember that (as with MBNA) you won’t be able to apply for a Barclaycard if you already have one.
Other balance transfer options
To make any of these cards work for you, you need to be sure you can clear your balance in a fairly short period of time (16 months or less). If you think it might take longer than that, consider taking out a low-rate, ‘lifetime’ balance transfer card instead.
These give you more breathing space, by offering a permanently low rate of interest.
My top choice in this category is another Barclaycard. The Barclaycard Simplicity card offers a rate of 6.8% APR on both balance transfers and new spending - and charges no transfer fee.
You’ll need a very good credit rating to be accepted for this card. And remember that this rate is variable, so make sure you check your statements regularly to avoid any nasty ‘rate rise’ surprises!
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