I want to take advantage of you. There's a fervour to save in January and while lots are buying in the sales, I want to skew that passion to make you sort out the big money jobs of the year. So this month's emails will unashamedly go back to basics to save you large. And the easy, big win right now is for those who have built up debt on credit cards.
The key rules are 1) stop borrowing more and 2) cut the interest rate. This means your repayments clear the actual debt rather than just profit the lender. The main weapon is a balance transfer, where you get a new card(s) that repays debts on existing cards for you, so you owe it, but at a far lower cost, for a small fee.
Right now the competition among lenders to do this is white hot. Just look at all the red 'new' headlines below; each a new best-buy. So I've asked the team to put together this masterclass with everything you need to know. Don't delay. SORT IT NOW AND YOU START SAVING NOW.
And if you won't listen to me, listen to Marc: "We took your tip on taking a balance transfer card and you have helped us to save £9,400 over the next 40 months. You guys are amazing."
1. The best-buy balance transfer cards. Before we get onto the best cards, there are three things you need to know.
- Get a personal best-buy table. Lenders credit-score you differently; so where one accepts, others reject. So use our free Balance Transfer Eligibility Calc which shows your acceptance odds for most top cards. The higher the percentage, the more likely you are to get it. Plus for some cards the calc shows if you're 'pre-approved', meaning you've a 100% chance of getting the headline rate (subject to ID checks).
- Go for the lowest fee in the time you're sure you can repay. Most cards charge a one-off fee on the amount of debt transferred (so 3% is £30 per £1,000). Calculate how long you think you'll take to clear the debt, add a bit for safety, then pick the lowest fee within that timeframe. Unsure? Play safe and go long.
- Some cards are 'up to' so you may get a shorter deal. That's why we include the best non 'up-to' options - where you know for sure what you get if accepted (our eligibility calc shows if you've good odds).
We've put the types of cards into three categories to make this easier.
Super-long 0% transfers (includes longest ever)
- New. Barclaycard up to 42mths 0% for a 2.99% fee, and you get £20 cashback. This new Barclaycard (eligibility calc / apply*) is the lowest-fee long card, plus transfer £500+ and you'll get £20 cashback to partly cover the fee. For most, if you can get it at the full 0% period it's the winning long card. Pre-approval? Yes. Rep APR after: 18.9%.
- New. MBNA up to 43mths 0% but with higher 3.29% fee + £20 cashback. This new MBNA card (eligibility calc / apply*) is the longest 0% card we've seen, yet with a higher fee than Barclaycard's and you need to shift £1,000 to get cashback. But if you've a better chance of getting it, or you're pre-approved, it can win. Pre-approval? Yes. Rep APR after: 20.9%.
- New. Sainsbury's 42mths 0% for a 3.5% fee (min £3), plus you get 3,000 Nectar points (worth £15) with a min £1,000 transfer. The key to this Sainsbury's card (eligibility calc / apply*) is if you're accepted, you definitely get the full 42mths 0%, and that certainty is important. So if the eligibility calc shows you're not pre-approved for the first two, if you want a long card and have a decent chance of getting this, it wins. Rep APR after: 18.9%.
Mid-length cards with lower fee
- New. Barclaycard up to 38mths 0% for a low-ish 1.45% fee, and you get £20 cashback. This Barclaycard (eligibility calc / apply*) has a low fee to shift your debt and you'll also get £20 cashback if you transfer £500+. Pre-approval? Yes. Rep APR after: 18.9%.
- AA up to 37mths 0% with higher 2.5% fee, but you get £50 cashback (£35 from 5pm Wed). This AA card (eligibility calc / apply*) has a higher fee than the Barclaycard above, but as it gives £50 cashback until 5pm on Wed when you transfer a min £1,500, it can beat that if you're quick and are shifting between £1,500 and £2,800. Rep APR after: 19.9%.
- New. Barclaycard up to 32mths 0% for a 0.63% fee, and get £20 cashback with min £500 transfer. This Barclaycard (eligibility calc / apply*) has a much lower fee than those above, so it's a good option if you can clear your debt quicker. Pre-approval? Yes. Rep APR after: 18.9%.
Shorter cards with NO FEE
- New. Sainsbury's Bank 25mths 0%, NO fee. This Sainsbury's Bank card (eligibility calc / apply*) offers the joint longest-ever 0% period with no fee to shift your debt, and if you're accepted you definitely get the full 25mths 0%. Rep APR after: 18.9%.
- Halifax up to 25mths 0%, NO fee. This Halifax card (eligibility calc / apply*) offers the same 0% period as the Sainsbury's card above, though it's possible you'll be offered fewer interest-free months. Rep APR after: 18.9%.
- Virgin Money 24mths 0%, NO fee. This Virgin Money card (eligibility calc / apply*) offers two interest-free years with no transfer fee, plus our eligibility calc can tell you if you're pre-approved. Pre-approval? Yes. Rep APR after: 19.9%.
2. Should I apply with just a 60% chance? We're often asked stuff like this. Actually 60% is pretty decent odds. It means over half those in your position get accepted. A story may help...
Martin sat with a MoneySaver who had large, costly credit card debts & a poor credit history. The eligibility calc showed zero chance of all balance transfers, except 20% chance with Halifax. She asked: "Is there any point?"
He explained as it was the only thing she needed credit for, 20% chance was better than nowt and the worst that could happen was she wouldn't get it. She applied and got a 26mth 0% card - £1,500 limit.
Equally, even a 95% score means 1 in 20 gets rejected.
3. Shift store card debts to 0% as well. These are just credit cards you only spend with in one store (or group of stores), but with far costlier interest. Eg, New Look's is 28.9% APR, Argos is 29.9%. But you can also balance-transfer store card debt, so follow the tips above.
4. Can you use a 0% card to pay off debt? We're often asked if you can shift loan, overdraft or other debt onto 0% credit cards. You can, but only via a specialist 0% 'money transfer' deal. This opens a wide door for cutting loan, overdraft and other debt costs - let us brief you first.
What is a money transfer? It's a credit card deal letting you pay a lump sum into your bank account, to use as you like, so you owe the card, for a small fee. Full help in Top Money Transfers (do follow the Golden Rules below).
What are the top deals? Virgin Money (eligibility calc / apply*) offers new cardholders 32mths' 0% money transfers for a one-off 1.99% fee (min £3). For longer, this other Virgin Money (eligibility calc / apply*) card's 36mths 0% for a 2.69% fee (min £3). The Money Transfer Eligibility Calc shows your acceptance odds. After the 0% ends these jump to 19.9% and 20.9% rep APR (APR Examples).
5. Join our FREE Credit Club to interrogate what lenders really think of you. Your credit history's a huge part of whether you'll be accepted for any type of credit. Our revolutionary, totally free MSE Credit Club tries to demystify the acceptance process and uncover the true picture of your overall financial appeal, for all manner of products.
It includes a free Experian Credit Score. But lenders don't stop there - and we wanted to mimic what they do more closely, so we don't stop there either. It also includes your unique Affordability Score, a Credit Hit Rate, which tells what proportion of products you've a good chance of getting, and tips on how to boost your score.
6. The Balance & Money Transfer GOLDEN RULES. Getting the right card's only half the job...
a) Repay at least the set monthly min, or you can lose special rates.
b) Always clear the card/shift again before the 0% ends, or rates jump.
c) Don't spend/withdraw cash on them, it's rarely at the cheap rate.
d) Unsure what to pick? Use our Which Card Is Cheapest? tool.
e) Check if you can use existing credit first. See Credit Card Shuffle.
7. Balance transfer common questions (& the answers too, obvs)...
- How does the balance transfer happen? Put your old card details on the application form and the new card provider does the rest.
- Can it clear multiple cards? Yes, if the new credit limit's big enough.
- How big will the credit limit be? That's a toughy; so far we've no way to know what the limit will be for each card, and it can vary.
- My credit limit is not big enough. What should I do? Balance-transfer as much of the most expensive debt you can. When done, apply for another card for the rest, fingers crossed you're accepted. Note, each subsequent application can get more difficult.
- Can I transfer the whole credit limit? Usually not. Most let you do 90%-95%, as they want to leave room for you to spend (avoid that).
- Should I use savings to clear the debt instead? If it's costly debt this is usually the best plan. See our Repay Debt With Savings? guide.
- I also want to do new borrowing cheaply, can I? If you've already got debt, you should be very careful about getting more. But if you must, you want a top 0% spending card. If you need to shift debts too, see top 0% balance transfer & spending all-rounder cards.
- My credit score is poor, what can I do? There are lots of things that can help over the long term; read 37 Credit Score Boosting Tips.
PS: Can't sleep because of your debts? This isn't for you. Forget the above and get free, one-on-one debt-counselling help from Citizens Advice, CAP, StepChange or National Debtline. They are there to help, not judge. The most common thing we hear after is: "I finally got a good night's sleep". Read some inspiring stories in our Debt-Free Wannabe forum and see our Mental Health & Debt guide. Full info: Debt Crisis Help.
This article first appeared in the weekly email on 4 January 2017.