Last week Barclaycard withdrew its half-price special offer for balance transfers. Even so, it's still tough to beat.
Barclaycard really shook up the credit card market last month with a half-price special offer for 0% balance transfer credit cards. Sadly, that offer has now been withdrawn. So if you’re looking to get a new 0% balance transfer card, what are your best options now?
Remember, when you’re evaluating a balance transfer card, you need to look at two figures: the length of the 0% period and the size of the balance transfer fee.
The whole point of a balance transfer is to enable you to pay off your credit card debt without paying lots of interest. So if the 0% period is relatively long, you’re more likely to pay off the whole debt before the interest-free period expires. And if the transfer fee is low, you’ll have more money to pay down your debt.
Favourite card
Focusing on both of these figures, my current favourite card is the Barclaycard 21 Month Platinum Visa card.
Let’s imagine you have a £3,000 debt on a credit card which is charging 17.9% in interest.
You’re fed up paying so much interest, so you transfer your debt to the 21-month Barclaycard. If you pay £143 each month, you’ll have paid off the whole debt at the end of the 0% period, and your only other cost will have been a £78 balance transfer fee.
But if you kept the debt on your existing card while still paying £143 a month, you’d end up paying around £555 in interest over the same period.
Paying off a £3000 debt with a 21-month Barclaycard
| Card | Monthly payment | Interest paid | Balance transfer fee |
| Original card 17.9% interest |
£143 | £555 | Zero |
| Barclaycard 21-month Platinum Visa |
£143 | £0 | £78 |
When the Barclaycard half price offer was still available you’d have only had to pay a £39 fee. But even with a £78 fee, moving your debt to the 21-month Barclaycard makes a lot of sense.
Let’s see how the Barclaycard compares with the other leading 0% cards:
Top 0% balance transfer credit cards
|
Card |
0% period |
Balance transfer fee |
Normal interest rate (APR) |
Comments |
|
HSBC Visa |
23 months |
3.3% |
17.9% |
Only for existing customers |
|
22 months |
2.9% |
16.9% |
|
|
|
NatWest Platinum |
22 months |
3.2% |
17.9% |
|
|
22 months |
3.5% |
17.9% |
Minimum annual income is £20k a year |
|
|
21 months |
2.6% |
17.9% |
|
|
|
MBNA Platinum Credit Card |
20 months |
2.85% |
16.9% |
|
|
Nationwide Select Card |
20 months |
3.1% |
12.9% |
Exclusive to current account customers. Commission-free purchases abroad. |
|
First Direct gold card |
20 months |
2.9% |
16.9% |
|
|
20 months |
3% |
16.9% |
|
|
|
Barclaycard Platinum Low Balance Transfer fee |
16 months |
1.6% |
18.9% |
|
|
15 months |
1.5% |
15.9% |
‘Soft search’ facility reduces chance you’ll damage your credit rating. |
If you think you’ll be able to pay off your credit card debt relatively quickly, the Fluid Card could be your best bet. That’s because it has the lowest balance transfer fee at 1.5%. On a £3,000 debt, that would work out at £45.
The card is also attractive because it has a ‘soft search’ facility. That means you can find out whether you’re likely to be granted a card before you make a formal application. As a result you’re much less likely to damage your credit rating by making an unsuccessful application for a card. Read more about credit ratings in What really damages your credit rating.
On the downside, the interest-free period only lasts for 15 months, but if you’re able to pay off your debt within that time, the Fluid Card is a very good bet.
MBNA
The other stand-out card in the table is the MBNA Platinum Credit Card. It offers a 20-month 0% period and charges a 2.85% fee.
That’s a less attractive deal than the 21-month Barclaycard, but you have to remember that existing Barclaycard customers won’t be able to benefit from that deal. So if you already have a Barclaycard and you want a long 0% deal, the MBNA card may be the best one for you.
Action
That said, it doesn’t matter that much which card choose. The most important thing is that you take positive action to get rid of your credit card debt. Doing nothing is the worst option because you’ll end up paying enormous amounts of interest to your credit card provider.
And if you aren’t able to get a 0% card – perhaps due to a poor credit rating – there are other things you can do. You may be able to transfer your debt to a low interest rate card or take out a personal loan.
If you can’t get either of those products, then it could be worth talking to one of the free debt charities such as the Consumer Credit Counselling Service or National Debtline. These charities can help people with serious debt problems negotiate with their creditors and potentially get a reduction in the amount of interest they pay.
The worst approach is to stick your head in the sand and do nothing at all.
More on credit cards from lovemoney.com