0% balance transfer credit cards can be really good if you’ve got credit card debt to pay off – they let you do so without having to pay any interest. You can transfer debt from another card to one of these and pay it off over a certain number of months. Read on for our pick of the best and see if they might be right for you.
- The longest 0% balance transfer deals are currently the HSBC Credit Card (15 months) and the Virgin Credit Card (14 months)
- The best of the rest
- A 30-day free subscription to Creditexpert should tell you if it’s worth applying.
- Top 0% charity credit cards
Who are these cards good for?
If you have an ongoing debt on a credit card that is currently charging you interest then a 0% interest balance transfer card could really help you to clear the debt. However, it depends how much debt you have and what the interest is that you’re currently paying.
If it’s a relatively small amount (say under £1,000) and the interest rate is below average (i.e. below about 17%) then you might be better off simply working to pay that debt off as fast as possible (see this article for tips on doing that). This is because all of the 0% deals charge you a small ‘handling fee’ (usually about 2.5-3%) to switch your balance over and that can wipe out any potential savings you might make.
Before applying for any credit card, you need to work out which one is best suited to your needs. If you will use your card for spending more than transferring balances then go for a card that offers 0% interest on purchases (see this article for the best 0% purchase cards).
Also, depending on your credit rating and the debt you need to move, it could be better in the long-term to move to a card with a low life-time balance. Bear in mind that to get a good 0% balance transfer deal, you’ll need a pretty good credit record.
Should I apply?
If you think your credit rating might not be up to scratch then check out your credit score before wasting an application. Remember that each time you apply for credit and get rejected you get minus points on your credit rating ’scorecard’. Get a 30 day free subscription to Creditexpert and check your score before applying (just remember to cancel it at the end of the free period if you don’t want to continue with a monthly subscription).
Currently, the longest interest free period for balance transfers comes with either a Virgin Credit Card which offers 0% for 14 months or the HSBC Credit Card which offers 0% interest for 15 months.
The Virgin Credit Card has a 2.98% handling fee, but it also offers 0% on purchases for three months. The HSBC Credit Card only charges 2.9% transfer fee (but with a £5 minimum) and it also offers three months 0% on purchases too. However, you have to hold a current account with HSBC to get the card and it has a typical APR of 16.9% after the introductory period, whilst the Virgin card charges 16.6% APR.
The Egg Visa card also has a great deal at the moment – 0% on balance transfers until 1 April 2011. You need to transfer your balance before 1 April this year and there is a 3% handling fee. However the APR is 16.9%, and the card also gives you 0% APR on purchases until 1 May 2010, and 22.9% on cash advances.
The brand new Santander Zero Credit Card also has a great 0% offer. You’ll get 0% on balance transfers for 12 months, 0% on purchases for the first three months and a 0% foreign exchange fee. If you currently hold a current account or a mortgage with either Santander or Alliance & Leicester you’ll get the added bonus of no fee to transfer your balance (for everyone else, there’s a 3% fee).
Other options include the Barclaycard Platinum Credit Card, which offers 0% interest on balance transfers until February 2011 (a 2.9% handling fee applies) as well as 0% interest on purchases for the first three months.
There’s also the Nationwide Gold Credit Card offering 13 months 0% on balance transfers with three months 0% on purchases and a typical APR of 16.9%. However when you apply for a credit card at Nationwide, they decide whether you are more suitable for either this card or their Classic Credit Card depending on your personal information. They say that the Gold Card is best suited to those aged 25 or over, with an excellent credit history and an annual income of £25,000. The Classic Card still offers the same 0% periods as the Gold Card, but the APR is higher at 19.9%.
With the Barclaycard One Pulse Cashback Visa, you can choose between having 0% interest on balance transfers for 12 months (with a 2.5% handling fee), 5% cashback on all Transport for London (TFL) fares, including the congestion charge, until February 2011, or 0% interest on purchases for 6 months. The typical APR is comparitively low at 14.9%.
Another one to look out for is the Halifax All in One Mastercard. This card offers 0% for 9 months on balance transfers made in the first 90 days (3% fee applies), and 0% on new purchases for 9 months. Plus the typical interest rate is a competitive 15.9% APR.
If none of these tickle your fancy, you can compare and choose more credit cards here.
0% charity credit cards
For those with a conscience, there are a few charity credit cards out there that will offer you some great 0% introductory deals. The Cancer Research UK Mastercard offers 0% on balance tranfers and purchases for 9 months, with a 3% fee. As an added bonus, £20 will be donated to the charity when you first use it and a further 0.25% of all your spending thereafter.
MBNA also offer a range of different charity credit cards 0% on balance tranfers for 12 months and 3 months 0% on purchases (3% fee applies). By using one of these cards regular donations will be made to your chosen charity at no extra cost to you. How much is donated is based on your card usage. You can chose to donate to: The British Heart Foundation, Breakthrough Breast Cancer, WWF, National Trust, Dog’s Trust, RSPCA.
What to watch out for
The point of taking out a 0% balance transfer card is to make your debt cheaper and easier to pay off. So don’t use it to spend with! Credit card card companies have a very sneaky thing called negative payment hierarchy – it means that they pay off the cheapest debts you have first. So if you were to spend on the card, your repayments would be going towards the debt you’ve transferred at 0% and you’ll be charged interest on the purchases you make, which means more debt in the end.
Once you have transfered your debt from another card - cut the old card up and close that account down. Don’t leave yourself the temptation of an empty card that you could just use to buy something you really don’t need and make your total debt even bigger.
It also goes without saying that you should never use a credit card to withdraw cash from a cash machine. The charges and interest rates for borrowing cash this way are insane and will very quickly plunge you into far more debt than you’re in now.
Remember how much interest you’ll be charged once the 0% period is up, and put everything into paying your debt off before then, otherwise you will have wasted an opportunity.
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I don’t think the advice regarding cutting up credit cards and closing accounts is particularly helpful. When credit scores are assessed they take into account debt to limit ratios. Thus the more credit you have available (on unused accounts) in relation to your outstanding balance – the more favourably you’ll be scored.
I disagree totally. As lending criteria get even tighter lenders look at the amount of available credit you have when decided whether to lend and how much to lend. If they see that you have a large amount of money still available to you on empty credit cards that you have not shut down, they will lend much less.
This really is posting is generally incredibly helpful. it truly provide my family what im interested in.
Just so everyone knows the Virgin 0% on purchases period is back down to three months now.
We always try to keep our articles up to date but rates can change quickly so be sure to check before you sign up!!
The Moneymagpies
Thanks for your comment. We’ve made the appropriate changes to the article.
The Moneymagpies
Inaccuracies in this article
Virgin 4% fee is just for money transfers not normal balance transfers
It has 6 months 0% for purchases, not three.
Do you actually fact check these articles or just take wild guesses and hope they are right?