A Guide to Credit Card Balance Transfers

If you’ve got a credit card already but you are finding it difficult to reduce the balance because the interest charges are eating into your monthly repayments, it may be worth considering a new 0% credit card.

By switching the balance from your existing card to a new zero per cent credit card you could get interest free borrowing for up to 29 months – this could save you a lot of money in terms of interest charges.

You will have to pay a one off balance transfer fee – typically 3% of the balance you switch, but in most cases it still makes financial sense to move your balance.

Here are the best cards as at 21st January 2021:

  • Sainsbury’s Bank – 29 months at 0% – 3.00% balance transfer fee – more info
  • MBNA – 28 months at 0% – 2.79% balance transfer fee – more info
  • TSB – 28 months at 0% – 2.95% balance transfer fee – more info
  • M&S Bank – 25 months at 0% – 2.85% balance transfer fee – more info
  • MBNA – 24 months at 0% – 1.50% balance transfer fee – more info

 

Your handy credit card balance transfer checklist

1. Establish exactly how much you owe – check your latest statement but don’t forget to include any additional purchases or payments you’ve made since then – if in any doubt give your card provider a call to confirm.

 

2. Work out how much you can comfortably afford to repay each month on a new 0% balance transfer card – ensure the amount is realistic and manageable within your monthly household budget. Divide your outstanding balance(s) by the amount you can afford monthly as this will help you select the card with a 0% term that works for you.

 

3. Check on money comparison websites for details of the very latest best buy interest free balance transfer credit cards – do you really need the longest 0% deal or are you comfortable that you can clear the balance in a shorter timescale?

As a rule of thumb, the longer the term of the 0% promotional deal the more expensive the balance transfer fee, so don’t opt for 28 or 29 months if you know you can clear your debt much sooner.

4. Use online calculators to see how much interest you could save by transferring to a 0% card – check UK Finance or Money Advice Service

 

5. Be aware that you can’t transfer card debts between certain credit cards – e.g.  No transfers between First Direct/HSBC/M&S/John Lewis credit cards as they are all part of the same group i.e. HSBC .

 

6. Apply for your card – make sure you have your income details and bank statements to hand so you are ready to fully complete the application in one go.

 

7.Ensure you make your balance transfer(s) within the limited timescale permitted – most card providers request that balance transfers are made within 90 to 120 days of the date your card account is opened.

 

8. Don’t give your card provider an excuse to terminate your 0% rate – set up a direct debit so at least the minimum repayment is made each month – this doesn’t prevent you making additional monthly payments, but by having the regular payment set up at least you know you will never miss a payment – this is very important because if you’re late with a payment or exceed your credit limit it’s highly likely that your 0% promotional interest rate will be terminated immediately meaning you will be faced with paying standard rates on your card balance and could be back to square one.

 

9. When your new account is up and running and balance(s) switched across, close down your old cards (3 key reasons)

  1. It will prevent you running up balances on these cards in the future (perhaps in a moment of weakness or by mistake)
  2. Card accounts with a zero balance will still be taken into account for future borrowing requests as the credit limit on that card is considered as borrowing available for you to use.
  3. If you repay a card balance and destroy the card, there is a security risk as you may move home and forget to advise the credit card company – when the card expires the replacement would be posted to your old address.

 

10. Monitor your new card balance and make a diary note for 2 months before your 0% deal expires to allow time to switch again if you know the balance isn’t going to be fully repaid by the time your promotional rate comes to an end.

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