0% balance transfer cards can be really good if you’ve got credit card debt to clear – they let you do so without having to pay any interest. Read on for our pick of the best 0% credit cards.
Who are these cards good for?
If you have an ongoing debt on a credit card that’s 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’ll use your card for spending rather than transferring debt, 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 lifetime balance. Bear in mind that to get a good 0% balance transfer deal, you’ll need a really good credit record. Remember that if you apply for credit (either a card, loan, mortgage or even hire purchase), they’ll run a credit check on you. If you fail that check with one or two lenders then it’ll harm your chances of getting credit elsewhere.
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 FREE 30-day 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).
If none of these tickle your fancy, you can compare more great balance transfer card offers here. Simply select ‘o% balance transfer’ from the drop-down menu in the top-left.
Remember that you can keep moving the money from card to card until you pay it off. However, it’s important to note that you have to pay a fee every time you transfer a balance. It’s usually not more than 3–4%, but if you’re borrowing big amounts then this can be a bit of a shock to the bank balance.
MBNA offer a range of different charity credit cards 0% on balance transfers for 12 months and three 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, Dogs Trust or the 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 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.
Don’t be tempted to spend money on your 0% balance transfer card! Only use it to help shift your debt. Other types of card (such as 0% purchase cards) are a far better option for spending.
Once you’ve transferred 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 an ATM. 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’ll have wasted an opportunity.