Best Balance Transfers

Do you have credit or store card debts? Shifting them to a new ‘balance transfer’ card can save you £100s or £1,000s. This daily updated step-by-step guide compares the best buy 0% and long term offers, takes you through choosing a deal and shows how to avoid nasty tricks.

• What is balance transfer?
• Choosing the right deal
• Best Buys: The cheapest long term deals
• Best Buys: The top 0% deals
• Best Buys: Top Low-Fee 0% cards
• Best Buys: Poorer credit scorers
• Never spend on a balance transfer card
• Balance transfer Q&As

Shift debts and fatten your wallet

Need a credit card for new borrowing? This article’s about cutting existing debt costs, for new borrowing see the Best 0% Card for Spending article.

What is a balance transfer?

For example:

• Current debts: Louiscard £3,000 at 18%, Cherylcard £1,000 at 16%.
• New credit: the Danniicard's 0% for 12 months on balance transfers.
• What happens: Ask the Danniicard to balance transfer the debts, it then pays £3,000 to the Louiscard and £1,000 to the Cherylcard.
• New situation: The Louis and Cherylcards are debt-free, as the debt has been transferred to the Danniicard; which you now owe £4,000 at 0%.

Most top balance transfer deals are for new cardholders, and require the debt to be shifted within a couple of months of opening the card account. Yet there are a few existing customer balance transfer deals which are very useful for more efficiently using credit you already have; full details on those are in the Credit Card Shuffle article.

It’s important you don’t confuse cutting the interest with paying less each month, as that’s determined by the minimum repayments. See the balance transfer Q&As for an explanation.

Choosing the right balance transfer deal

This depends on a number of factors… how much debt you’ve got, how quickly you can repay it, your credit score, and how on-the-ball you are financially. The following questions should help you pick the right deal.

Have you got a good credit history?

Yes

No

. Will you pay off these debts within a year?

Yes

No

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Head for the best 0% deal.

You should easily be able to pay off the debts with very little cost. See the best 0% credit cards section.

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. Are you willing to change card every 6 - 12 months?

Yes

No

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Congratulations, you’re ready to be a credit card tart.

Disloyally moving from 0% deal to 0% deal is by far the cheapest way to deal with your debts; yet you must be dedicated and on the ball. See the best 0% credit cards section. Most people should err on the side of caution and answer ‘no’.

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Most balance transfer cards require a good credit score.

If your credit score isn't good, the likelihood is you’ll either be offered a much worse rate than advertised, or be rejected. If you’re commonly rejected for new credit, have CCJs or defaults, a balance transfer won’t work for you. Yet there are still techniques you can use to save money; see the bad credit rating balance transfer section.

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Congratulations. If you have a Nationwide Flexaccount (with a debit card) or one of these specific credit cards, you're already holstering one of the very cheapest ways to spend abroad.

Do be careful with the Abbey card though, you specifically need the Abbey Zero credit card, not any Abbey card. To find out why and how best to use it, read the Cheapest Cards for Overseas Spending section.

If your destination is unlikely to accept cards, or you would like a little cash just in case, read the Cheapest Travel Money section which includes a free tool to get the best deal

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Don't worry, there are still some great long term low rate deals.

This is a much easier, less hassle way to save money than credit card tarting. Here you only need to move the debt once and then just repay it. See the best long term cheap credit section.

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Should I cancel old cards?

If you've regularly used cards to balance transfer in the past, it's likely you'll have held cards from many of the top pick providers below. Each has its own rules, but many card providers will automatically reject you if you already have one of its products, or have in the past twelve to eighteen months.

To help, where possible we've listed alternative cards, in case you aren't eligible for the top picks. To improve your chances of getting the best deal, cancel any cards that you have open but don't need.

BEST BUYS: Cheapest long term deals

This is the no-hassle route; simply get the card, move your debts, then put the card away and pay it off, knowing it’s cheap. Most people will be better off going for a long term cheap ‘stable relationship’ rather than trying to be a credit card tart; as it only takes a few mistakes to make tarting very costly.

The gold standard for long term cards is a ‘life-of-balance' transfer deal; here the cheap rate lasts until the debt you've shifted is repaid in full.

• Barclaycard Platinum, 6.3% APR for three years.
  Top if you can repay within three years
  
  If you can repay your balance within three years, the top pick is the Barclaycard Platinum 'Long Term Balance Transfer' card. This offers 6.3% APR on debts switched to it for the first three years, and charges no balance transfer fee provided you shift your debt within 60 days of opening the card. Any balance shifted over £5,000 is charged at 6.9% APR.
  
  You need to earn £20,000, be over 21 and not hold another Barclaycard to get this. If you already have a Barclaycard, and can repay your debt in under three years, Capital One gives 6.9% APR until 1 January 2012, with no fee. You'll need a good credit rating to get this; by Capital One's criteria, this means a homeowner earning £20,000+, who's operated credit well in the past.
  
  Quick Stats, B'card. Promo Rate: 6.3% APR for three years. Fee? Not in first 60 days. 2.5% after. Standard Rate: 12.4% APR Required Income: £20,000 Any Restrictions? Must be 21+, and not have a Barclaycard
  
  Quick Stats, Cap One. Promo Rate: 6.9% APR FIXED until Jan 2012 Fee? No Standard rate: 15.9% APR Required Income: £20,000 Any Restrictions? Must be 21+, not have a Cap One card and be a homeowner.
  
  
• Barclaycard Simplicity, 6.8% APR for LIFE.
  Top if you'll repay in three to five years
  
  If you will need more than three years, the cheapest rate is on Barclaycard's* Simplicity card at 6.8% APR life of balance, plus there's no fee provided you shift your debt within 60 days of opening the card. Any balance shifted over £5,000 is charged at 6.9% APR, plus you must be aged 21 or over, and have a salary of £20,000 or more.
  
  Quick Stats. Promo Rate: 6.8% APR life of balance Fee? Not in first 60 days Standard Rate: 6.8% APR (spending) Required Income: £20,000 Any Restrictions? Must be 21+, and not have a Barclaycard
  
  
• Leeds BS, 5.9% APR, plus 2% fee.
  Top if repaying will take over five years.
  
  For anyone who will take over five years to pay off the debt, the Leeds Building Society card charges at 5.9% APR life of balance, plus a one-off fee of 2%. After number-crunching, it's the cheapest long-term option, but always remember that taking longer to pay off your debts will result in them costing possibly £100s more.
  
  This is a joint venture with Barclaycard, so if you already have one of those it's unlikely you'll be accepted, and should look at the top non-Barclaycard. This card also offers cashback and a 0% rate for new purchases, yet never ever ever use these or it'll end up costing you big (read more below)
  
  Quick Stats. Promo Rate: 5.9% APR life of balance Fee? 2% Standard Rate? 17.9% APR Required Income: N/A Any Restrictions? Must transfer balance in 60 days of getting the card.
  
  

The most important warning

There’s a hidden sting with these cards; if you spend on them, it’s at a high interest rate and can’t be repaid until all the cheap debt has been. They may try and tempt you with cashback or short term 0% deals on any spending; ignore it. The rule is simple; never, ever, ever, ever spend on these cards. If you do all the benefit will be lost. For a full explanation read the never spend on a balance transfer card section.

BEST BUYS: Top 0% credit card balance transfers

If you can pay your debts off in under a year, or are prepared to be a credit card tart and continually shift debts (read a full tarting explanation) then you want a 0% deal.

It’s not simply a case of the longer the 0% deal the better. Many cards charge balance transfer fees of up to 3% of the debt shifted. Thus it’s a question of balancing the 0% deal and the fee, depending on your needs.

Also, if you've previously had a card from a provider, it's unlikely you'll get another one from the same company for a while. If this applies, go for the best card that you haven't had recently.

The longest 0% deals

All these deals require you to pay a one-off fee when you do the transfer, the trade-off is you get it interest free for a long time.

• Virgin, 0% for 16 months. Longest deal, with a 2.98% fee.
  
  The longest deal available is with Virgin*, which lets new customers move debt to it at 0% for 16 months, with a one-off fee of 2.98%.
  
  It's long been a best buy though, which means many people already have the card, or another from the MBNA stable (inc. A&L). If so, you may be rejected or given a lower credit limit. Plus be especially careful with MBNA cards to always make at least the minimum repayments on time, or you can lose the special deal and pay the standard 18.6% on all shifted debts.
  
  Quick Stats. Promo Rate: 0% for 16 months Fee? 2.98% (min £3) Standard rate: 18.6% APR for balance transfers, 16.6% for purchases. Required Income: N/A Any Restrictions? If you have another MBNA card, acceptance unlikely
  
  
• Abbey, 0% for 15 months. In Branch or Phone only.
  
  Abbey gives 15 months 0% on debt shifted to it, for an ever-so-slightly higher fee of 3%, yet this is only available in branch or on the phone. While it used to be a part of the MBNA group, these days its cards are issued by Spanish parent bank Santander, so those who already have MBNA cards shouldn’t have a problem.
  
  Quick Stats. Promo Rate: 0% for 15 months Fee? 3% (min £5) Standard rate: 15.9% APR Required Income: N/A Any Restrictions? No
  
  
• HSBC/Natwest/RBS, 0% for 15 months. Online, but you need their bank accounts too.
  
  These big banks all offer competitive deals, but you must have one of their uncompetitive current accounts. If you do, HSBC* offers a big 15 months 0% with a 2.9% fee (16.9% APR after), while Natwest* and RBS* also both give 15 months at 0%, again for a one-off fee of 2.9% (16.9% APR after).
  
  Oddly, despite HSBC not being linked to the Natwest/RBS group of banks, these credit card deals are identical. It's unlikely to be worth switching to a current account with any of these banks just for the credit card though; instead check out an alternative below.
  
  Quick Stats. Promo Rate: 0% for 15 months Fee? 2.9% (min £5) Standard rate: 16.9% APR Required Income: N/A Any Restrictions? No
  
  
• Trying to tart? Up to 13 months 0%, if you need a DIFFERENT card
  
  If you've previously had a card from all the providers above, it's unlikely they'll give you another one for at least eighteen months after you closed it. In this case, to avoid rejection, go for one of the next longest deals...
  
  
  Egg.
  Transfer debt to Egg* and you get 0% until 1 December 2010 with a one-off fee of 3%, followed by 16.9% APR. As this ends on a set date, the earlier you apply, the longer the deal is.
  
  Halifax.
  Halifax and sister bank Bank of Scotland's Plus cards gives 13 months 0% on transfers made in the first 90 days, for a one-off 3% fee, after this it's 16.9% APR.
  
  Nationwide.
  Nationwide's Classic card gives 13 months 0%, for a one-off 3% fee, then 19.9% APR.
  
  Post Office.
  Of the glut of cards offering 12 months 0%, Post Office* with a 2.98% fee (16.9% APR after) stands out from the crowd.
  
  
  
  

Low-fee 0% balance transfers

If you can clear your debts more quickly than the 0% periods above, it's possible to slice down the size of the fee you pay, cutting the overall cost of paying off your debts.

• Barclaycard, 0% for 12 months, 2.5% fee.
  
  The Barclaycard Platinum* card gives new customers a good 0% until December 2010, for a one-off fee of 2.5%. This is the longest deal with a fee of less than 2.9%, making it the top pick if you can repay your debts within a year.
  
  You'll need to be over 21, with an annual salary of £20,000 or more to get this. If you already have a Barclaycard open, there's a good chance you won't be accepted, in which case, try an alternative card from below.
  
  Quick Stats. Promo Rate: 0% for 12 months Fee? 2.5% Standard rate: 12.4%. Required Income: £20,000 Any Restrictions? If you have another Barclaycard, acceptance unlikely
  
  
• Play.com, 0% for 6 months, for 1.5% fee. Shorter 0%, but much lower fee.
  
  Online shop Play.com's card offers 0% interest for six months when you switch debt to it. That's far shorter than the top picks, but a low 1.5% fee makes it attractive if you'll repay the balance more quickly. On a £5,000 balance, the difference between this and a 3% fee is a hefty £75.
  
  However, dont be tempted by the card's other features: a nine months 0% spending deal, and £15 Play voucher when you spend £150. If you take advantage of these, it'll break the golden rule, and potentially cost you big; instead read 0% Cards and Credit Card Freebies. This card's from the MBNA stable too, so if you've had one before, transferring here may not work.
  
  If you want a six month 0% deal, but already have an MBNA card, two other cards have decent offers of six months 0% with a 2% fee: Tesco (then 18.2% APR) and Virgin Atlantic White* (then 17.9% APR).
  
  Quick Stats. Promo Rate: 0% for 6 months Fee? 1.5% (min £3) Standard rate: 17.9% APR for balance transfers Required Income: N/A Any Restrictions? No
  
  
• Northern Bank, 0% for 5 months, NO FEE. Northern Ireland ONLY.
  
  The only totally fee-free card available is restricted to Northern Irish customers, in branches of Northern Bank. You get five months at 0%, and won't pay a fee. Make sure you repay the debt or shift it before the 0% period ends though, or you'll pay the huge 22.9% APR.
  
  Quick Stats. Promo Rate: 0% for 5 months Fee? NONE Standard rate: 22.9%. Required Income: None Any Restrictions? Available in NI branches only.
  
  

Watch out for good junk mail

This is one of the few areas where junk mail can be positive. Very occasionally direct mail offers, targeted website offers or sign-up stalls in shopping centres offer better deals so keep your eyes open, but ensure you ask about any fees.

BEST BUYS: Top deals for poorer credit scorers

The advent of the credit crunch means it’s more and more difficult for anyone with a less than perfect credit history to get good credit limits or decent deals. Assuming you’ve already checked your credit score and followed the tips there for improving it, there are still a number of ways to cut your costs.

• Only got limited/minor issues?
  
  If you haven’t tried in the last year or so, it’s still worth trying an application for the top cards, as listed above. There’s still a chance you’ll be accepted; if you are rejected, then follow the system below.



• Use a ‘credit worthiness' comparison.

  The comparison site Moneyextra* does a personalised credit card search. It asks 5 quick questions to assess your credit worthiness, then tries to match you up with the best card. This uses ‘soft searches’ of your credit file, which importantly don’t leave a mark (hence don’t hit future applications)

  A similar but far less wide ranging service is offered by Find a lender, plus it’s worth taking a look at our quick Credit Checker. These are a bit rough so shouldn’t be relied upon fully, but can give a decent indication of the cards you may get without doing a proper credit search

  These services are useful, but don’t cover all cards, so they should only be used if you think you may have credit issues. It’s also worth noting the comparisons are basic and exclude many issues; so always double check it’s the correct product for you, following the logic in this article before applying for a card.

• Get cheaper debts without new credit.

  You don't need a new card to get new credit. It's possible to play the system and get much cheaper debt by utilising existing customer balance transfer deals to more efficiently use your existing credit. For full details on how to do this, read the Credit Card Shuffle article.

Never, ever, ever spend on a balance transfer card

There is no single more important thing to remember about balance transfers than the following…

No matter how often I write or say this, I’m still often asked, "I know you say never, ever, ever spend on the card; but I did and it’s costing me a fortune, what can I do?”. If you have debts from spending on a card with a cheap balance transfer deal it’s likely to cost you a fortune, the only real way to beat this is not to let it happen.

The reason behind this is complex, so if you don’t understand my explanation below don’t worry, just remember the ‘never, ever, ever’ rule and you’ll be fine.

Why it’s such an expensive nightmare

Credit cards allow us to do a number of different things such as spend on them, shift balances to them or withdraw cash. These are all different ‘transaction types’ and it’s the interactions between them that cause the problem.

• Each type of transaction has a different interest rate. Thus while it might be 0% for balance transfers, any spending is likely to be at a much higher interest rate and cash withdrawals even more.


• Your repayments are biased towards clearing the cheap debt first. You can’t choose what your money goes to, the credit card company does. And lenders almost always automatically bias your repayments to pay off the lower interest debts first.

This means the expensive debts from spending are effectively trapped, speedily accruing interest, and you can’t repay them until you’ve cleared all the cheap debt. Thus it can cost a fortune. This is very profitable for lenders; it’s why many cards with good balance transfer deals also have enticements like reward points, cashback deals or short term 0% deals for spending.

While it mightn’t look a big deal; it’ll cost you a fortune. So much so, it’s often cheaper to get a separate card for spending even if it has a higher ‘spending rate' (though of course better still get one with a cheap rate see Credit Card for Spending article). Therefore as a strict rule, never, ever, ever spend on these cards! Just transfer the balance, make the repayment and put the card away in a drawer.

As the table shows, over 6 months nothing beats 0% interest, it'll save a fortune. Yet over the longer time period, a stable relationship card beats everything but pure tarting.

Balance transfer Q&As

Q. How do I practically go about doing a balance transfer

A. When you apply for the new card, it will usually include a ‘do you want to transfer debts from other cards?’ section. In this you just put in the details of the other cards; and if you’re successful getting the new card, it will pay them off. Even if you don’t do it at initial application; most cards normally allow you to do a transfer within a set period of getting the card (usually 30 – 90 days); all you need do is call up and send them the details of your other cards.

Q. Does having a new lower interest rate mean I pay less each month?

A. No. These are totally separate things. Unlike loans, with credit cards you choose how much you repay each month, though every card has a set ‘minimum monthly repayment’. The interest rate is the cost of the debt; for example, a rate of 20% on £1,000 means it costs you £200 per year (see the how Interest Rates work article for more).

This does mean in some circumstances you may shift debt to a new cheaper card, but if it has a higher minimum, you’ll need to pay more each month. If that may be unaffordable, ensure you check the minimum repayments before switching.

Q. How much should I pay off each month?

A. As much as you can, even 0% debt is still debt. The more you repay, the faster the debt disappears. Especially important is that you try and pay more than the set minimum. For more on that and tips on how to do it, read the Minimum Repayments: Danger! article.

Q. If lowering the interest doesn’t mean I pay less, what’s the point?

A. The cheaper the interest rate, the more of your repayment goes towards clearing what you owe than servicing the interest, meaning you’ll be debt-free more quickly and will have to pay less in total to do it.

Q. What should I do if the credit limit I get isn’t high enough?

A. Move what you can, then if needed simply apply for another provider's card and move the rest there. Don't leave it unused out of exasperation, it's already on your credit file so you may as well use it (read the Credit Card Limit: Didn't get what you wanted? article).

Q. How will the credit crunch impact balance transfers?

A. The credit crunch means it’s more difficult to get good balance transfers. One of the great worries is that as credit limits are getting lower, people will need two new cards to cover all the debts on one old card. This in turn means more applications which will hit credit scores. If this is something that’s happening to you, the sensible strategy is to turn to long term deals to ensure you have access to a cheap rate permanently.

Q. How many times can I do a balance transfer?

A. As many times as you like, you can balance transfer from card, to card, to card. The only limiting factor is whether your credit score is high enough to be accepted for new cards.

Q. At what point during tarting should I apply for a new card?

A. The best time to apply is roughly six weeks before your current 0% deal ends. This gives you enough time to apply, find out if you’ve got the card, and shift the debt, while your other card is still at 0%. Use the Tart Alert to remind you when.

Q. Does being a credit card tart hurt my credit score?

A. Multiple applications, especially close together, and high outstanding debts, even at 0%, diminish your ability to get competitive credit. The most important preventative measure is to spread card applications out.

Do this and most people with reasonable income and no missed payments should be able to tart without worry, though occasionally some get scored out (read Credit Ratings: How they work and how to improve them article).

Q. I understand the ‘never ever ever rule’ but what if my card’s got a cheap deal for spending too?

A. The basic answer is always err on the side of caution. However, if a card has a 0% deal for purchases and balance transfers that lasts exactly the same length of time, then it’s fine to spend on. However if they’re not identical e.g. 0% for purchases for 3 months and 0% on balance transfers for a year… don’t do it. If you haven’t cleared your spending debts (and it may not be possible to do so, depending on the repayment hierarchy) they’ll end up being trapped in like normal.

Q. Is the balance transfer fee interest free as well?

A. This depends on the specific card; and it does vary. Usually you do pay interest on the fee, yet it’s arranged so your first monthly repayment pays all of it off, so the interest is negligible.

Q. Which cards give the best credit limits?

A. This is almost impossible to answer, you’re credit scored depending on that lender’s wish list for a profitable customer. So it all depends on how well you fit what it wants. In general though Barclaycard has a reputation for lower credit limits and the MBNA* range of cards higher limits.

Q. Why did it reject me, I’ve got a great credit score?

A. Remember lenders choose on their wish list for profitable customers, its not all about risk… read the credit scoring article for a full explanation. Of course you should check for errors on your credit file, but hard and fast reasons are difficult to come by, it may be as bizarre as it was choosing to give credit cards to customers it’s more likely to be able to flog a mortgage too.

Q. Why did it give me a different card to the one I applied for?

A. Some cards operate a rate for risk policy.

Q. Are there any other things I should look for when picking a 0% card?

A. If you want to get a little advanced, it is worth considering whether the card offers existing customer balance transfer deals (as explained in the credit card shuffle article). This is a useful option for long term tarts as it offsets the risk of being rejected due to a poor credit score.

• MBNA card range: While most of these cards do have a balance transfer fee, MBNA tends to repeatedly offer good deals to existing customers, often at 0% though you need to call it and ask. If you're adopting this strategy it may be worth taking the hit of a fee to keep this facility open. The main cards are MBNA*, Alliance & Leicester and Virgin*.


• Egg. Egg* has an anniversary deal which means on the anniversary of being accepted for the card you are allowed to shift debts to it at 0% for 5 months, although it charges a 2.5% fee. For more details on this read the Egg Loophole article.


• Barclaycard. Barclaycard allows existing customers to shift debts to it at 6.9% life of balance (i.e. until all the debt is repaid) for a one off 2.5% fee, thus giving you a back up option of long term cheap debt if necessary. For more info see Barclaycard Loophole article.

Q. My question hasn’t been answered in the above list, what should I do?

A. If it’s a general question about how balance transfers work, then please ask it here and I will endeavour to include it in the article. If it’s a specific question about your situation or a product, then please use the question/discussion link which will take you to the Forum where you can chat about it with other MoneySavers.