Find out which credit cards will help you get out of debt in 2010...
The New Year brings with it a number of things. Resolutions that are meant to be broken. Visits to the gym that fizzle out by mid-February. And debt. Usually a lot of it.
Clearing debt is important, because unlike other resolutions, if you put it off, you will pay the price, quite literally, for years to come.
Doing the math
Let's say you have £2,000 of debt on a credit card with an APR of 18.9%.
If you only paid £50 off each month, it would cost you nearly £1,100 in interest payments, and would take over five years to pay off.
Even if you made payments of £100 a month, it would still take two years to pay off and cost you nearly £400 in interest.
0% credit cards to the rescue
0% balance transfer credit cards not only provide breathing space for you to sort out your finances but, because they're interest-free for a year or longer, can save you a small fortune in a relatively small space of time.
And, with many providers pushing up their rates despite the decline of the Bank of England base rate, now is the perfect time to ditch those loyalties and take one out.
Here's what the top six providers are offering:
| Provider and card | APR (typical) | Length of 0% balance transfer |
| Virgin Money MasterCard | 16.6% | 16 months (2.98% fee applies) |
| Santander Credit Card | 16.9% | 15 months (3% fee applies) |
| NatWest and RBS Platinum Credit Card | 16.9% | 15 months (2.9% fee applies) |
| MBNA Platinum Visa | 15.9% | 13 months (2.9% fee applies) |
| Nationwide Gold Credit Card | 16.9% | 13 months (3% fee applies) |
| Barclaycard Platinum with 12 Month BT | 14.9% |
12 months (2.5% fee applies) |
The market leader is still the Virgin Money credit card which offers 16 months interest free borrowing (includes a 2.98% fee).
This means you won't have to pay the bulk of your debt until May 2011.
Virgin also offers a flexible way to pay off your overdrafts and loans through what's known as 'Money Transfer'. You can make these transfers when you activate your card, or via Virgin's internet banking service. Just make sure you have your bank account or loan number to hand.
The only downside is you'll pay a slightly higher handling fee of 4% on any money transfer you make.
If you're tired of hearing about the Virgin credit card, or have already had one, the next best card is the Santander Credit Card, which offers 15 months interest free on balance transfers (a 3% fee applies).
The NatWest and RBS Platinum Credit Card credit cards also both offer 15 months interest free (a slightly lower fee of 2.9% applies). However, you need to have a current account with one of them in order to apply.
The perfect balance transfer
If you're someone who's made several balance transfers in the past, it's important to remember that you cannot shift debts between cards issued by the same provider.
This means that if you're an existing Virgin customer, you can't dump your debts onto a MBNA Platinum card because they are part of the same credit card group, MBNA.
Similarly, if your debts are on a MINT card, you cannot transfer it onto the NatWest and RBS Platinum Credit Card.
For a comprehensive explanation of which providers are in bed with each other, read A deck of different credit cards.
Beware of the trap
It's important to keep things simple when dealing with a 0% balance transfer card, and if you're using the card for this purpose, you must not make purchases on the card too.
Ignore this advice, and you'll be caught out by something called negative payment hierarchy.
A card that operates negative payment hierarchy allocates any payments made to your cheapest debts first, such as promotional balance transfers, and the most expensive, such as cash advances, last.
This means if you buy anything that isn't interest-free while you're still paying off the promotional balance transfer, interest will rack up on the purchase you made until the balance transfer is paid off.
All the cards listed above operate negative payment hierarchy - apart from Nationwide. This means you can take advantage of the three months interest free it also offers on purchases, without worrying that you'll be penalised.
Another credit card where you don't need to worry about negative payment hierarchy is the Sainsbury's Finance Mastercard.
It only offers ten months interest free on balance transfers, but this is coupled with ten months interest free on purchases. As the promotional periods are equal, it doesn't matter how the payments are allocated, as both debts will be interest-free.
Compare credit cards at lovemoney.com
More: How to survive until payday / No need to worry about money, ever again!