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If you have outstanding credit card balances, balance transfer credit cards can be a great money-saving tool to help you clear up your existing card debts and get back in control of your finances.
However, when it comes to choosing a balance transfer credit card the choice is phenomenal.
With so many card companies competing for your business and each offering varying deals on your balance transfer it can be tough to know which one will be best for you.
The balance transfer deals available...
Surprisingly, there are actually only two main types of balance transfer deals. 0% offers and life of balance offers.
0% balance transfers offer a 0% rate of interest on the balance you move over from your existing credit card, or cards, for a short period of time - usually around 6 to 12 months.
Life of balance transfers offer a low rate of interest on your transferred balance until you have repaid your debt in full. The actual rate offered varies between cards but it always much less than any standard rate and tends to be around 4% - 5% per annum.
How do I know which type of balance transfer deal to choose?
There are other deciding factors involved, but the first question to ask is "How long do you need the deal to last?"
If you can repay your outstanding credit card balances within 1 year, then you should go straight to a 0% balance transfer credit card - if you repay within the introductory period you won't be charged any interest, and although you will usually have to pay a transfer fee, you'll still save more money this way.
See all 0% balance transfer credit cards here.
If you know that it will take you much longer than 1 year, maybe several years, to repay your outstanding credit card balances you may find you would be better suited to a life of balance transfer deal.
Although you will have to pay interest charges on your balance, they will be a whole lot cheaper than what you may be currently paying. You'll also get the peace of mind that you can take as long as you need to repay your balance.
See all life of balance transfer credit cards here.
You may also want to consider, "Would you be willing to move your balance again?"
If the answer is yes, and you know it will only take a couple of years to repay your current credit card balance(s) then you could consider transferring to a 0% balance transfer credit card now, and then move again at the end of the introductory period.
It's important to be aware though that transferring from one card to the next can be a great short-term solution. However, it is not a great long-term strategy as you may find it harder to get accepted for 0% cards if you have a track record of transferring a lot between 0% cards.
Another important question to ask is "Do you also want to use the new credit card for spending?"
If you do, you need to be very aware of how card issuers handle the payments you make to your account.
The majority of credit card issuers will always allocate your payments to your cheapest rate balance first - in this case your transferred balance. Only when you have repaid all of your cheapest rate balance will your payments be applied to repaying any standard or higher rate balances, such as purchases or cash withdrawals.
Due to this 'allocation of payments' if you spend or withdraw money on a 0% balance transfer credit card this transaction will effectively become trapped behind your transferred balance where it will accrue interest charges until you have first repaid your balance transfer in full.
Thankfully, there is a solution - and aside from just using a different credit card for any spending, you can opt for a credit card that offers 0% rates on both balance transfers and purchases for the same length of time.
See all credit cards suitable for transferring to and spending on here.
Remember though, never use any balance transfer credit card for cash transactions - always use your debit card instead!
Compare balance transfer offers
When you know the type of deal that will suit you, you should compare at least 3 different credit cards before deciding on the card you want to apply for.
Show me all credit cards offering:
Compare 0% balance transfer credit cards
Compare life of balance transfer credit cards
Compare 0% balance transfer and purchase credit cards
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