If you're fed up being charged a high rate of interest on your credit card debt, you can slash the amount you pay by moving what you owe to a balance transfer card.
This type of credit card usually offers a long 0% introductory rate, giving you breathing space to pay off what you owe without having to worry about interest charges.
Bear in mind, though, that most balance transfer cards charge a fee when you move a balance across, which is usually a percentage of the amount you're transferring.
You must also be certain you can clear what you owe within the 0% period, as interest charges will shoot up when it finishes.
New Year, new balance transfer deals
The good news is that the New Year has seen several credit card providers launch competitive new balance transfer cards with interest-free periods as long as 40 months.
That's well over three years without having to pay interest on what you owe.
But note that some of these offers are only available for a limited time.
For example, Halifax has just introduced a 40-month interest-free balance transfer card, but to qualify, you have to make any transfers within 90 days and transfer at least £100. This offer is only available until February 15.
If you don't clear your balance within 40 months, or you make transfers after 90 days, the interest rate on this card will rocket to 18.95% (variable) a year. The card has a representative rate of 18.9% APR (variable).*
The Halifax card has a transfer fee of 2.95%, providing you make your transfers within 90 days, otherwise you'll pay 3%.
So if you transfer £1,000 of debt at 2.95%, you'll pay £29.50. If you transfer £2,000, it will cost you £59.
Virgin Money has also just launched a new balance transfer card deal. The card offers 38 months interest-free on both balance and money transfers, with a one-off balance transfer fee of 2.49% for balance transfers and 4% for money transfers.
You must make balance transfer and money transfers (where a cash balance is added your card which you can then move to a bank account and spend as you wish) within 60 days of opening your account.
After the interest-free period ends, you'll be charged interest at 18.9% (variable) a year on balance transfers and 20.9% (variable) a year on money transfers. The card has a representative rate of 18.9% APR (variable).**
Can you clear what you owe sooner?
If you think you can pay off what you owe in a relatively short period of time, you may be better off opting for a balance transfer card with a shorter interest-free period.
That's because the longer the 0% offer, the higher balance transfer fees tend to be, so if you opt for a shorter-term deal, you'll usually pay less to move your balance across.
Virgin, for example, offers a 32 month interest-free balance transfer card, with a balance transfer fee of just 0.99% (min £3). A 4% fee (min £3) applies to money transfers.
Like Virgin's 38 month offer, once the introductory period ends, you'll be charged interest at 18.9% (variable) a year on balance transfers and 20.9% (variable) a year on money transfers. The card has a representative rate of 18.9% APR (variable).**
Barclaycard also offers a BT card with 32 months interest-free, with a transfer fee of 1.08% for the first 60 days. After 60 days the fee increases to 3.5%.
After the 32 month interest-free period ends, you'll be charged 18.9% pa (variable). The card has a representative rate of 18.9% APR (variable).**
What if I can't be certain when I'll pay off what I owe?
The benefit of opting for a card which is interest-free for a long period is that you can focus on paying off what you owe without having to worry about interest charges. The downside, however, is that if you don't manage to clear your balance in the interest-free period, you'll then face much steeper charges.
If you can't be certain that you'll pay off your debt within a set period of time, you might want to consider a balance transfer offering a consistently low rate instead. Although you'll be charged interest, you won't have the pressure of having to pay off what you owe within a certain timeframe.
*Representative Example: If you spend £1,200 at a purchase interest rate of 18.95% 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 18.9% p.a. (variable) your representative rate will be 18.9% APR (variable).
Remember: credit limits and interest rates will vary based on your individual circumstances.