If you've got debt on your credit card or you're planning to put Christmas on the plastic, you'll soon be bracing yourself for some hefty interest fees when the next bill comes in.
But act fast and you could avoid paying any interest for the next three years.
Virgin's 40-month 0% balance transfer card is back
The balance transfer market is fiercely competitive, with credit card companies constantly trying to outdo each other by offering ever-increasing 0% balance transfer periods.
A balance transfer is when you move debt accumulated on one card over to another that's offering a better deal. Having a 0% balance transfer period means you don't pay any interest on the debt you transfer.
Remember, though, that you usually have to pay a fee – calculated as a percentage of the balance you're transferring – when you move the money across.
Barclaycard usually leads the way with its 37-month Platinum Credit Card with Extended Balance Transfer, but Virgin blew the competition out of the water in the summer when it released its 40-month offering to mark its 20th anniversary in business.
But now it's back for another strictly limited period, and you've got two weeks to get your hands on arguably the hottest balance transfer card out there.
If you want to get hold of Virgin's 40-month Balance Transfer Card, your credit rating is the first thing to consider – if it's less than perfect there's a good chance your application will be rejected.
If you're in any doubt, it's worth checking out MoneySuperMarket's SmartSearch facility, which allows you to can check all the cards on the market to find those most likely to accept you without leaving any trace of a search being made on your credit file (too many searches in a short period of time are just one of the ways your score can be affected).
If you're good to go, get your application in before Wednesday, December 16, and if you're accepted you'll have 60 days in which to transfer your debt and pay nothing in interest until 2018 – meaning you can put the Christmas shopping on an old card and, once it's all done, transfer the debt and avoid paying interest.
What's the catch?
Unfortunately, this deal isn't without its catches, the most obvious one being you'll have to pay a fee of 2.99% of the total balance you are transferring, so transferring £500 of debt, for instance, will set you back an extra you £14.95.
A heftier balance of, say, £2,000 will set you back £59.80 to transfer, and while this may seem steep, it works out at just £1.50 a month over the 40 months, which is nothing compared to the interest you'll pay if you let that £2,000 sit on an old credit card.
If you're transferring £100 or less, there's a minimum transfer fee of £3.
You also need to make sure you make the balance transfer within 60 days of opening your account, if not you'll not only see the balance transfer fee leap to 5%, you'll also lose the 0% perk and pay interest at a representative APR of 17.48% (variable).*
This is also the rate of interest you'll pay on any balance outstanding at the end of the 40 months.
And, as with all credit cards, if you miss or make a late monthly payment you'll most likely see the interest-free period end instantly.
What are the alternatives?
While 40 months at 0% is a great offer, if you've not got a massive balance to transfer you may be better off taking advantage of a card that comes with a shorter interest-free period and a lower balance transfer fee.
Santander's 123 Credit Card, for instance, offers 23 months at 0% on balance transfers and does away with the transfer fee – so if you think can afford to pay off around £90 a month, you may be better off shifting that £2,000 debt on to this card.
If you don't pay the debt of at the end of the 23 months, interest jumps to a representative APR of 16.5% (variable)**.
Alternatively, the AA Balance Transfer Credit Card also does away with the transfer fee and offers 22 months at 0% on balance transfers, after which time the APR is set at a representative rate of 19.9% (variable)***.
To see what balance transfer cards are available, check out MoneySuperMarket's Balance Transfer Calculator – just input the balance you want to transfer and the monthly repayment you can afford and it will show you the cheapest option (it assumes you'll pay the same amount each month, so if that's not going to be the case, then the answer won't necessarily be right).
*Representative Example: If you spend £1,200 at a purchase interest rate of 18.9% p.a (variable) your representative rate will be 18.9% APR (variable)
**Representative Example: If you spend £1,200 at a purchase interest rate of 16.5% p.a (variable) your representative rate will be 16.5% APR (variable)
*Representative Example: If you spend £1,200 at a purchase interest rate of 19.9% p.a (variable) your representative rate will be 19.9% APR (variable)