Resolve to make a dent in your debt this year with the best balance transfer cards.
For many of us, 2012 is starting with a few money worries.
Perhaps your Christmas was a little more expensive than you’d planned. Perhaps you simply had an expensive 2011 overall. Or perhaps you have some big event ahead this year - a wedding, a baby - and the spending has already started.
So if you’re starting this new year with a stack of debt on a credit card, and it’s weighing heavy on your shoulders, fear not! I’m here to highlight the 12 credit cards which will help you clear that debt with as little stress as possible.
0% balance transfer credit cards
The obvious place to start is with an interest-free balance transfer credit card. These cards offer you a set period where you won’t pay a penny in interest on your debt. So you can relax, safe in the knowledge that all of the money you repay each month goes directly towards reducing your debt, rather than on interest payments. It also means you can clear that debt in manageable chunks!
The market-leading cards at the moment offer some unbelievable periods of 0% interest, with the top deal from Barclaycard allowing you to avoid interest for two whole years!
|
Card |
0% period |
Transfer fee |
|
24 months |
3.2% |
|
|
HSBC MasterCard (available to HSBC current account customers only) |
23 months |
3.3% |
|
22 months |
2.9% |
|
|
22 months |
3.5% |
|
|
21 months |
2.6% |
|
|
20 months |
2.9% |
|
|
20 months |
3% |
As you can see, if you’re after a long period free from interest, Barclaycard has a number of enticing offers to consider. However, an important thing to consider here is that you can’t transfer debt between cards from the same provider. So if your existing debt is already on a card from Barclaycard, you’ll have to consider one of its rivals for your balance transfer.
Low-fee 0% balance transfer credit cards
Of course credit card providers don’t offer you whopping great periods of 0% interest out of the goodness of their hearts. There has to be something in it for them, and that something takes the form of the transfer fee you have to pay in order to shift your debt over to the new card.
In some cases that fee can be a pretty significant charge. Take the Halifax MasterCard, with its 3.5% fee. On a transfer of £10,000, that works out at £350.
However, some cards have carved out a niche for themselves by offering extremely low transfer fees.
So, if you want to pay the smallest fee possible, and don’t need the full two years in which to clear your debt, which are the cards to go for?
|
Card |
0% period |
Transfer fee |
|
16 months |
1.6% |
|
|
16 months |
1.99% |
With the Barclaycard Low Fee Platinum credit card, the transfer fee is ordinarily 2.1%. However, new customers who transfer a debt over within 60 days of taking out the card will receive a partial refund of the fee, making it effectively 1.6% of the balance transferred.
In truth there isn’t a huge amount between these two cards – on a debt of £10,000, you’re looking at fees of £160 and £199 respectively.
Low-rate balance transfer credit cards
So far all of the cards I’ve looked at base their appeal on interest-free periods, months and months (even years) in which you don’t pay a penny in interest. However, there is another form of balance transfer card that may be just as good for you, but still charges interest. Intriguing, right?
The problem with 0% cards, whether they charge a fee of 1.6% or 3.5%, is that at some point that interest-free period comes to an end. Now, if you’ve managed to clear your debt within that interest-free offer period, then you have nothing to worry about.
But if you still have a load of debt to clear, then you have to go through the hassle of finding a new card, checking you can transfer your debt over to it and then fork out a transfer fee. Otherwise you'll face vast interest charges on your remaining debt.
And who is to say that the offers at that point will be as tempting as they currently are? Perhaps the 0% periods will disappear, perhaps fees will double, who knows?
If you want to keep life simple, you could stick with a low-rate credit card. These offers rates of interest far smaller than the typical 19% or more that you’ll pay with most 0% cards at the end of the 0% period. What’s more, there’s no transfer fee to worry about. I looked at the appeal of these cards in a little more detail in Why you don’t need a 0% credit card, but the cards below are the best ones around at the moment.
|
Card |
Representative APR |
|
6.9% |
|
|
7.9% |
|
|
9.9% |