24 months might be the longest 0% deal you can get when transferring your existing debts, but there are still better deals out there.
Barclaycard is a lender that dominates the balance transfer market, with a wide selection of cards on offer at the moment. That includes the card offering the longest period of interest-free credit: 0% at 24 months, with a fee of 3.2%.
But it still isn't the best balance transfer card out there.
Don't be distracted by length
You have to take into account not just the length of the deal but also the size of the fee to see which deal is the best value for money. The 3.2% fee on that Barclaycard is on the high side, since many shorter deals have lower fees.
There is a mathematical way to combine the length of the deal and the fee into one number, the “equivalent APR”, which is similar to an APR figure. This makes the deals easy to compare by telling you what rate you'd pay if the card was a loan charging interest instead of an up-front fee.
Here's how all the leading cards currently face up, ranked by both length of the deal and fee size using the “equivalent APR”:
Top balance transfer cards
|
Card |
Length of 0% deal (months) |
Balance-transfer fee |
Equivalent APR |
|
16 |
1.6% (after a rebate) |
2.3% |
|
|
16 |
1.99% |
2.8% |
|
|
21 |
2.6% (after a rebate) |
2.9% |
|
|
22 |
2.9% (after a rebate) |
3.0% |
|
|
24 |
3.2% |
3.1% |
|
|
20 |
2.99% |
3.6% |
|
|
22 |
3.5% |
3.7% |
|
|
Creation Credit Card/NatWest Platinum MasterCard/Royal Bank of Scotland Platinum MasterCard |
20 |
3.2% |
3.7% |
|
18 |
3% |
3.8% |
|
|
17 |
2.9% |
3.9% |
|
|
17 |
2.95% |
4.0% |
|
|
17 |
3% |
4.0% |
This table does not include cards with annual fees or that are exclusive to existing customers. Equivalent APR rounded to one decimal place. Data from lovemoney.com and the lenders' own websites.
Barclaycard continues its domination of the top cards with four out of the best five when comparing both the length of the deals and the size of the fees using the equivalent APR. As you can see, its 16-month deal with a 1.6% fee is the best bargain, boasting the equivalent of 2.3% APR. This compares very favourably to Barclaycard's 24-month deal with a 3.2% fee, which is the equivalent of 3.1% APR.
Ensure you read Barclaycard's terms and conditions so that you can get the rebate on fees that make these deals the best.
It's also worth noting something about the Halifax deals. The bank offers some successful applicants shorter 0% deals than those noted in the above table, depending on your status, which could be a good or a bad thing. Read more in New credit card trick to watch out for.
Longer deals could still be cheaper for you
The “equivalent APR” calculation rests on the assumption that you pay off the entire card debt during the 0% deal and in equal instalments. If you need longer to pay off the debt, longer deals with higher fees will work out better for you.
Also, there is an even cheaper way to pay off your debt:
1. Pay just the minimum monthly amount – rather than paying off the debt in equal instalments.
2. Save the difference in a savings account, where you'll earn interest, which will pretty much pay for the fee.
3. In the last six weeks or so, transfer your savings back to your current account and pay off the full card debt.
To make this a bit more simple, for each £1,000 of debt you transfer to Barclaycard, you'd need to repay about £25 each month to avoid penalties, and in your savings account you'd save another £20 or so if you're using the 24-month deal and roughly another £40 with the 16-month deal.
More: compare credit cards through lovemoney.com | Halifax Reward Account paying £100 cashback | Make a fortune in the Chinese Year of the Dragon