If you want to transfer a balance onto an interest-free credit card, check out these two brilliant buys.
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If you have outstanding credit card balances -- but would like to see the back of them before the next decade dawns - there are two brilliant 0% balance transfer cards which can help you.
Both will freeze the interest you pay on borrowing until 1 January 2010, allowing you 15 months of freedom to beat down those dreaded debts!
A rare piece of good news
It isn't often you hear anything positive about financial products -- especially in the current climate. Thanks to the effects of the credit crunch, borrowing is more expensive now than it was last year, and fewer people feel so confident when applying for credit.
But here's a ray of sunshine that might cheer your heart: according to Fool partner Moneyfacts, the number of credit cards offering lovely, long 0% deals has actually increased since this time last year.
Back in August 2007, just over 36% of 0% balance transfer offers ran for 12 months or more. However, in August 2008 almost 48% of those deals ran for at least a year -- which is great news for anyone who's tired of credit card tarting.
The new terrific two
The two cards I'm excited about right now are the Capital One Platinum BT & Purchase MasterCard and the Barclaycard Platinum with BT MasterCard/Visa.
While both these cards will charge you around 3% of your balance as a one-off fee, both also fit into that fabulous group of 0% balance transfer cards whose offers last more than 12 months. Here's how they measure up against one another -- and against a standard credit card, which has a typical APR of 17.5%.
Credit Card | Typical APR | Balance Transfer Fee | Opening Balance | Monthly Repayments | Balance After 15 Months | Interest (+ Fee) Paid After 15 Months |
|---|---|---|---|---|---|---|
Standard credit card | 17.5% | N/A | £2,500 | £175 | £170 | £297 |
0% until 1 January 2010; 15.9% thereafter | 3% | £2,500
| £175 | £0 | £75 | |
0% until 1 January 2010; 14.9% thereafter | 2.9% | £2,500 | £175 | £0 | £72.50 |
As you can see, despite the fees they charge, both the Capital One Platinum card and the Barclaycard Platinum would save a borrower who owed £2,500 more than £220 between now and the end of the noughties.
More importantly, by opting for 0% balance transfer card, this borrower would pay off his or her balance in full over the next 15 months - and so would be debt-free by New Year's Day 2010!
Spot the difference
While there's little to choose between them in terms of money saving smarts, there are subtle differences between these cards.
Firstly, Capital One's slightly higher balance transfer fee (3%, compared to Barclay's 2.9% fee) means it is a marginally more expensive option. The APR on the card after the promotional period is also 1% higher than Barclaycard's -- so any delay in shifting remaining debt at the end of the 0% deal would prove more costly, too.
Secondly, the Capital One card can be difficult to get unless you have an `excellent' credit rating.
According to Capital One's website, this means applicants should:
have an existing credit card with a limit of at least £5,000;
have had a credit card for at least five years;
not have missed more than two payments on a credit card or loan;
have credit card balances of less than £10,000;
have no previous credit defaults, such as CCJs or current arrears.
For these reasons, I think the Barclaycard just pips Capital One to the post.
Of course, getting approved for the Barclaycard isn't plain-sailing, either.
Barclaycard say their Platinum card is suitable for applicants with a `good credit history' -- which means you'll still need to have a credit record showing responsible borrowing and regular repayments, in order to get the goods.
You also need an annual income of at least £10,000 to qualify for both these products.
And as it isn't ever advisable to apply for credit you're unlikely to get, I'd recommend checking your credit report before taking the plunge with either of these cards if you're at all unsure.
Put down that purchase!
Both the Capital One Platinum and Barclaycard Platinum offer promotional 0% periods on purchases alongside their balance transfer deals.
If you opt for the Barclaycard, this extra offer lasts for three months from the date your account is opened. Alternatively, Capital One's 0% on purchases deal lasts until 1 January 2009 -- running out exactly a year before its balance transfer offer.
However, anyone planning to transfer a balance to one of these cards should steer clear of spending on them -- regardless of the temptation these 0% promises present.
If you pay for anything with these pieces of plastic, you'll be hit by the dreaded negative repayment hierarchy. Ouch!
It pays to be a newbie
When it comes to getting great deals on financial products, new customers often fare better than existing ones.
These two credit cards are no exception to the rule: both the brilliant balance transfer deals featured in this article are only available to applicants who do not already hold a credit card with the lender they choose.
That's why, in my opinion, they're a devastating duo: I think it's likely that if you're unable to apply for one, you may be able to opt for the other -- and save yourself lots of money by doing so.
Play whichever card you choose right, and it could prove an invaluable help towards sorting out your cash concerns before the next decade commences.
Good luck!
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