MBNA has lowered its balance transfer fee but in a highly competitive market how does it stack up?
The balance transfer credit card war show no sign of abating with MBNA the latest provider to drop its balance transfer fee. It's cut it to 2.85%, from 3.5%, on its 24-month 0% card.
This means it’s now cheaper to move a debt over to the card, but are there better deals around?
The deal
The MBNA Platinum Credit Card is designed for balance transfers and has a two-year 0% period. The fee is now 2.85% which means if you transferred over £2,000 you would need to pay £57.
The interest rate on the card is 16.9% and it also allows money transfers from the credit card to a current account, which are set at 0% interest for the first two years, but these have a hefty fee of 4%.
If you go for this card you won’t be able to transfer over a debt from an existing MBNA card.
The top balance transfer cards
Our article - The best 0% balance transfer credit cards – has details of all balance transfer cards on the market but here I’ve picked out the top five.
As you can see Barclaycard tops the table with its 26-month card but this has a high fee of 3.5%. It also has a higher interest rate than the MBNA card, which kicks in after the end of the 0% period.
Tesco also has a card offering a longer 0% period of 25 months which also pays out Clubcard points so is a good option for Tesco customers.
|
Card |
0% period |
Fee |
Fee paid on £2,000 |
Representative APR after 0% period |
|
26 months |
3.5% |
£70 |
18.9% |
|
|
25 months |
2.4% |
£48 |
18.9% |
|
|
25 months |
2.5% |
£50 |
18.9% |
|
|
25 months |
2.9% |
£58 |
16.9% |
|
|
MBNA Platinum |
24 months |
2.85% |
£57 |
16.9% |
As you can see, while the fee cut by MBNA has improved it as a proposition, there are still plenty of cards offering longer 0% periods. Indeed, there are two cards that offer both a longer 0% period and a smaller balance transfer fee!
Is a balance transfer card right for you?
The majority of the cards at the top of the tables will only accept people with an excellent credit history.
[SPOTLIGHT]Therefore if your credit history isn’t looking too good a credit builder card might be more suitable. Similarly if you don’t want to pay a huge fee to transfer over a credit card balance, a card with a lower fee would be a better option.
The rates you see are also only applicable if you keep up monthly payments on time. If you miss one, for example, the balance transfer period can be cut, you can be charged a fee and this may cause a black mark on your credit history.
These cards also only work if you pay back the debt owed during the balance transfer period. At the end of this period the interest rate will kick in and if you’ve still got a debt on the card your monthly outgoings will shoot up. At this point it may be possible to switch the balance onto a new card but there’s no guarantee you’ll be accepted.