The hidden cost of 0% credit card deals

Credit cardsInterest-free offers on balance transfer credit cards have never been longer. As long as you have a good credit score, you can avoid paying interest on your debts for up to two years.

But with the upfront balance transfer fees you pay to benefit from 0% deals shooting up to 3% or more, do they still offer value for money?

How much difference do higher balance transfer fees make?
Depending on how much debt you need to transfer to a 0% card, the amount you pay to make the switch can be well over £100 pounds.

Halifax, for example, currently offers one of the longest 0% deals on the market at 22 months. But this deal comes with a whopping 3.5% fee, meaning that someone transferring £3,000 on to the card would pay £105 at the outset.
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The Barclaycard Platinum (with longest balance transfer) card, meanwhile, offers an incredible 24 months at 0%, but has a balance transfer fee of 3.2%.

A consumer with £5,000 to transfer would therefore pay £160 to get the card, which also offers three months at 0% on purchases and has a standard rate of 17.9%.

It may therefore be worth considering a shorter 0% deal with a lower fee if you think you can pay off what you owe more quickly.

Which 0% cards have lower balance transfer fees?
The market-leading cards offering 20-plus months at 0% on transferred debts all have balance transfer fees of around 3% or more.

But if you think that you can pay your debts off within 13 months, you can pay a balance transfer fee of just 1% by taking advantage of the NatWest Platinum Special Offer card.

It too has a standard APR of 17.9%, but the lower fee means that transferring £3,000 would cost you just £30 upfront, while switching across debts of £5,000 would mean a £50 charge.

You could therefore save more than £100 – as long as you succeed in paying off your balance in full within the 13-month interest-free period.

Other low-fee options include the Virgin Low Fee Balance Transfer Credit Card, which offers 0% for nine months subject to a one-off charge of 1.5% (as long as you transfer the debts within the first 60 days).

Someone switching across debts of £3,000 would therefore pay £45, while a borrower with £5,000 to transfer would pay £75.

Be sure to meet the 60-day deadline to make transfers, though, as any debts transferred after that point will incur a balance transfer fee of 2.89%.
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