How to Compare 0% Balance Transfer Credit Cards
0% Balance Transfer
Best Buys
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» 0% on balance transfers
for 15 months (% fee) |
0% purchases for 3 months Why? "Best-buy topper offering the best 0% balance transfer deal available - 15 whole months!"
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» 0% on balance transfers
until (% fee) |
Then, 0% on balance transfers from Aug 2009 until 1 Feb 2010 (% fee)
0% purchases until Why? "13-month long 0% balance transfer offer plus even more 0% from August 2009 for 6 months until 1st Feb 2010.
Mint now comes with a competitive standard interest rate for keeping the odd-shaped plastic in your wallet well past the 0% expiry dates."
% APR
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» 0% on balance transfers
until (% fee) |
Then, 0% on balance transfers for 5 months in 2010 and 2011 (2.5% fee)
0% purchases until
Why? "Super long 0% balance transfer deal for up to months, with a second-year and third-year helping too!"
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0% Balance Transfer FAQ's
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THE introduction of 0% balance transfer credit cards has revolutionised the credit card industry, and there are no shortage of deals out there offering zero interest on old credit card debt if you sign up.
Competition in the sector is extremely high, which is good for the consumer in the sense that there are a lot of offers out there. However, this huge amount of choice also presents a challenge: how to sift through all the dozens of offers and find the one that's right for you?
Alongside our compare 0% balance transfer credit cards page, where you can view the offers side by side and compare and contrast, we have compiled this guide to help you understand the most important features of 0% balance transfer credit cards, to help you make the most informed decision possible.
0% balance transfers cards are suitable for...
- Those with outstanding credit card debt
0% balance transfer credit cards are ideal for anyone with an outstanding balance on their credit card or cards, and for those who are paying interest on this debt.
Moving your balance to a 0% balance transfer credit card immediately stops interest accruing, giving you a financial breather and an opportunity to reduce your overall liability.
The money you are spending on servicing the debt on your current credit card can instead be put towards directly paying off the sum owed, and you can take big chunks out of it during the 0% interest period.
0% balance transfer deals only last for a certain period of time - usually not much longer than a year - after which time you will begin paying interest again.
At the end of this period you will have two choices, either to move your debt to another 0% balance transfer credit card, or to move it instead to a life of balance transfer credit card, where you will get a low rate, often fixed, until the balance has been cleared.
- Clearing the balance during the 0% window
If you have a moderate amount of debt, that you know you could clear with just a little bit of help, then you really should get a 0% balance transfer credit card.
Such a deal will save you money, reducing the amount thrown away on paying interest, and will help get you out of debt much more quickly.
- Being a 'Credit Card Tart' - moving the balance again after the 0% balance transfer window has ended.
If you have a large amount of debt that you won't be able to clear during the 0% balance window, make sure you keep one eye on the calendar, and remember to shift your balance to another 0% balance transfer card, or indeed a life of balance card, before you start paying the standard rate of interest again.
0% balance transfer credit cards are not ideal for...
- Large balances that will take longer than a year to repay
Well, they are and they aren't.
If you have a high level of credit card debt, you might just want to opt for a life of balance transfer credit card straight away.
These credit cards offer a low rate - usually 4% to 5% per annum, that will remain fixed or at least low until you have your debt repaid in full.
The benefit of life of balance transfer credit cards is that you don't have to worry about introductory rates ending, and you can take your time clearing your balance without always fishing for the next 0% balance transfer deal.
- Using the 0% balance transfer credit card for purchases
There's sometimes a bit of sneaky clause inserted into 0% balance transfer credit card deals, which could end up costing you a lot of money if you aren't careful.
Many 0% balance transfer offers include a 0% purchase deal too - where you pay 0% interest on purchases made with the credit card.
However, the 0% offer on purchases deal is often offered for a shorter period than the 0% interest on your existing debt. What's more, the credit card company often stipulates that the 0% balance transfer - or "longest 0% period balance" - must be paid off first, before any of your payments will be applied towards any standard - or even 0% - purchases.
What this means is that you are trapped - you are paying high levels of interest on purchases (when the shorter 0% purchase period expires), and you can't even pay this debt off... because it's effectively 'stuck' behind a mound of cheaper balance transfer debt that must be repaid first.
Complicated? Simply put - if you are using a 0% balance transfer credit card to 'store' a medium to large amount of debt, then you should be wary about using the same credit card to buy things.
The way to figure out whether a particular 0% balance transfer credit card deal is suitable for purchases or not is this: first, check to see whether 0% on purchases is offered as part of the deal - and most importantly - that the 0% purchase deal lasts for the same duration of time as the 0% balance transfer deal.
This equal length 0% offer eliminates any balance being at a higher rate - and so even if your payments do go to your balance transfer first, it won't matter as everything is at 0% for the same time period.
The only thing to be aware of then is cash withdrawals (ATM withdrawals, foreign currency purchase, etc...) - as these won't be included in the 0% deal and they will become trapped behind the cheaper 0% balances.
0% balance transfer and purchase credit cards aren't quite as popular with credit card issuers as the 0% balance transfer with shorter purchase deal, namely because they don't make quite as much money for them.
However, there are a few cards of offer that will allow you to safely transfer a balance to and make new purchases on the same plastic while enjoying what a 0% deal should be - free!
Capital One offer the longest equal length deal on the Capital One Platinum credit card with 0% on balance transfers and purchases for the next 12 months.
If the card you have isn't suitable for both balance transfers and new purchases during the 0% period, then you could look to get a second credit card for the new purchases either a 0% purchase credit card, or a longer-term low interest rate credit card.
Opting for two cards may seem extravagent but it's money saving, and can even enable you get the longest 0% periods on both - getting you a 0% balance transfer for up to 15 months and 0% on purchases for 12 months - which is far more than you would ever find on a combined deal.
- Bad credit history
A poor credit history will mitigate against you when you apply for a 0% balance transfer credit card.
Too many rejected applications can further hurt your credit score, so if you know you are going to be rejected, it may not be worth trying.
One way to rebuild your credit score is to take out a credit card specifically designed for people with a bad credit history to improve their credit score. Compare bad credit rating credit cards here.
The interest rates on these cards however, is astonishingly high, so it won't be worth trying to move your existing card debt onto one. Instead, leave it where it is and focus on repaying it - if you are struggling to meet the repayments get in touch with the lender and tell them, often they will be able to reduce the rate - or freeze it altogether - to enable you to repay the money you owe.
Finding out what the offer entails
To find the best 0% balance transfer credit card for you, it is necessary to understanding exactly what the various deals offer. As we have discussed, such offers give you a 0% interest rate on balances transferred from a different credit card for a set introductory period.
This fundamental characteristic is common to all such offers, but there are certain details that differentiate one 0% balance transfer deal from another.
The primary factor to be aware of is the Allocation of Payments stipulation, which we covered above, and which could, if you use the credit card for purchases, end up costing you a lot of money.
It's best that you choose a card that offers a 0% purchases deal that matches the duration of the 0% balance transfer offer, but such offers are becoming increasingly scarce.
If you're not sure where you stand with regard to this situation, it's probably better to simply not use your 0% balance transfer credit card for purchases, and use another card instead.
As with all such financial products, before signing up to a 0% balance transfer credit card, make sure you have read the fine print. You never know what nasty little surprises are lurking there...
One final thing: Avoid cash transactions
Unfortunately; no credit card will include cash transactions in its 0% introductory offer. So you will have to pay interest on such transactions, and invariably will not be able to pay off the sum until you have cleared any cheaper (0%) balance.
We always advise a debit card for cash transactions anyway - as most credit cards charge steep fees, and of course interest, when you use it at the ATM or getting 'cash back' at the supermarket check-out, buying foreign currency etc. (this is not always the case though, see credit cards for cash transactions). And bear in mind that gambling transactions are now also classed as cash transactions.
Fundamentally though, 0% balance transfer credit cards are a great product, if used correctly. If you do have credit card debt which is costing you money in interest fees, particularly, you should get stuck into our list of 0% balance transfers offers, and find a deal without delay!
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Compare 0% balance transfer credit cards
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