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By Russell Cavanagh
Staff Writer, 8 March 2010
HOW can I transfer money to a current account? Several credit cards promote a "balance transfer" facility and offer an introductory 0% period. Of these products, a few actually allow you to transfer any amount, up to your credit limit, direct into a current account.
Also known as super balance transfer credit cards, they need to be chosen carefully as not all balance transfer credit cards offer this facility - and they can be very costly if you get the wrong deal.
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Reasons to transfer money to a current bank account
If you have an out of control overdraft that's piling on interest and charges or need to pay off borrowing elsewhere, using an appropriate 0% balance transfer credit card to transfer money to your current account can be a good option.
Another reason to transfer money to your current account is in order to profit from the discrepancy between interest paid by your bank and the 0% interest charged by the credit card. This is known as "stoozing" and basically offers a chance to borrow money at 0% on the card and let the transferred balance sit in your savings account and grow with the interest the bank pays you. (Banks operate this way with each other all the time!)
Which particular credit cards allow balance transfers to current accounts at 0%?
Virgin Money, Egg, Post Office and most MBNA credit cards allow 0% or promotional rate balance transfers to a current account.
Go to our super balance transfer credit card comparison to see the details of all these specific cards.
MBNA, Virgin and Egg Money all offer a range of options for making transfers to a current account easy. These include online facilities, telephone banking and paper forms (dispatched with the card).
Other points to remember and consider
Not all 0% balance transfer credit cards let you move money to your current account - check with the lender or look at the terms & conditions first.
Other credit cards may allow you to transfer to your current account but fees and interest can apply that make it an unrealistic proposition.
In considering a transfer, you need to weigh up transfer fees - typically around 3% of transaction value - when deciding if it is financially worthwhile.
Transfer fees would certainly mean that relocating money through a current account to spend on cash goods would prove more expensive than simply using a 0% purchase credit card to pay for the goods. Introductory 0% deals on both balance transfer and purchase credit cards tend to average 15 months so there's no advantage to be gained by using a balance transfer promotion for new purchases.
You would have to stick faithfully to minimum monthly payments and any other balance transfer terms and conditions in order to continue to take advantage of the 0% transfer rate. Failure to do so could mean the promotional rate is withdrawn.
And don't forget to repay the balance owed on the card before the end of any promotional period. Otherwise, you'll end up paying standard interest on how much is left owing.
Summing up
If you can access the few credit cards allowing 0% balance transfers to current accounts, you may find that you reduce your overall debt repayments (clearing overdrafts, etc) or even make a profit ("stoozing").
However, you need to be careful to get the right credit card and to stick to the terms and conditions sensibly.
This is a great facility if you know what you are doing.
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