Britain’s best bet for balance transfers
After a few difficult credit crunch years, confidence is slowly returning to the balance transfer market. If you’ve got a debt you want to get rid of, a balance transfer card may actually be the most economical way of dealing with it. Why? Because with zero interest to pay on the debt, or balance, you transfer on to the card, all of your repayments go towards clearing the balance, and not interest or fees which a bank might hit you with if you took out a conventional loan to clear the debt.
How did these balance transfer cards come about? Is it because the banks are secretly very kind organisations who want you to clear your debt? Of course not. They’re secretly hoping that having a credit card in your pocket will encourage you to spend money. While your transferred balance is interest free, you can bet that additional spending will not be.
Do be careful though – some of these balance transfer cards will hit you with a “switching charge”, and you’ll need to make sure that doesn’t turn your interest free offer into a bit of a costly nightmare. Here are a few recommendations for balance transfer cards with low handling fees.
The current market favourite is Santander’s 123 card. With 23 months of no interest on balance transfers and new purchases, that’s nearly two years to clear your debt. It’s the longest interest free period on the market. There’s no switching charge, but you will pay £36 per year for having the card.
Snapping at its heels is an offer from Halifax. Again, you have 23 months of zero interest on balance transfers, as long as the transfer occurs within 90 days of you getting the card.
Halifax also offers to waive the transfer fee on its 23 month balance transfer deal if you make your balance transfer within the first 90 days. Any new purchases you make on it are interest free for six months.
An unlikely bronze medal winner is the AA – yes, the car breakdown company. They offer 22 months of interest free balance transfers, and new purchases are interest free for three months. Being the car rescue specialists, their perk is 40% off European breakdown cover, as long as you take them up on the offer before April 2016.
Tesco get a mention in this arena, too. Their Clubcard Credit Card has no switching fee. With 21 months of no interest on balance transfers, it nearly made it to our top three. However, it does lose points for its policy on new spends – only one month is interest free on them. After that, you’ll be paying 18.9% on new spending.
Remember that balance transfer credit cards are not the easiest to be accepted for. Generally, applicants must earn a minimum of £10,000 – £20,000 per year. If you have a poor credit history, you may well find yourself rejected, and as with all credit applications, repeated failed applications will hit your credit score and make you ineligible for other loan products, so consider your options before filling in that application form.