Why the top credit card isn't always the cheapest

If you're looking to pay off some credit card debt it doesn't always pay to go for the longest 0% card.

Why the top credit card isn't always the cheapest

The 0% balance transfer credit card market is heating up once again, with providers locked in a battle to offer the longest lasting interest-free deals.

Halifax is the latest to go all out with its 41-Month Balance Transfer Credit Card. It offers a whopping 41 months to freeze your debt, but you'll have to hand over a 3.5% fee.

The Virgin 41-Month Balance Transfer Credit Card also offers the same market leading interest-free period, but will charge you 4% for the privilege.

While these 0% deals are undoubtedly the longest on the market, that doesn't necessarily mean you should take them out.

That's because the fees they attract are much bigger compared to other top deals, which are just one month shorter.

When the best deals aren't really that good

Fee charges on 0% balance transfer credit card deals can make a big difference if you are tight on funds and trying to get back in control of your finances.

So they are worth keeping an eye out for when shopping around.

As you can see below when organising the top longest lasting 0% balance transfer deals for best buy 41-month cards and runner-up 40-month cards by the cost of the fee, the market leading offers end up bottom.

Credit card

0% balance transfer period

Fee

Cost of transferring £2,500

Bank of Scotland Platinum 40-Month Balance Transfer Credit Card

40 months

2.41%

£60.25

Lloyds Bank Platinum 40-Month Balance Transfer Credit Card

40 months

2.41%

£60.25

Sainsbury's Nectar Exclusive Long Balance Transfer Credit Card

40 months

2.42%

£60.50

Tesco Bank Clubcard 40-Month Balance Transfer Credit Card

40 months

2.60%

£65

MBNA Platinum 40-Month Credit Card

40 months

2.79%

£69.75

Sainsbury's Nectar Long Balance Transfer Credit Card

40 months

2.89%

£72.25

Halifax 41-Month Balance Transfer Credit Card

41 months

3.5%

£87.50

Virgin 41-Month Balance Transfer Credit Card

41 months

4%

£100


With the Virgin 41-Month Balance Transfer Credit Card, you'd pay £100 to move a £2,500 balance but you could save £39.75 by going for the Bank of Scotland Platinum 40-Month Balance Transfer Credit Card or Lloyds Bank Platinum 40-Month Balance Transfer Credit Card deal that is one-month shorter.

Finding the best deal for you

Choosing the right 0% balance transfer deal really depends on how long you need to clear your debt and finding the card that's cheapest, rather than going for the headline best buys.

The easiest way to work this out is to calculate how much you can afford to pay back each month.

Larger debts will generally be better off on the longest lasting deal to minimise the size of the monthly repayments. But it's worth exploring deals that sit near the top of the table that are perhaps are a month or two shorter to see if you can save.

Using the example of the longest lasting deals, I've factored in the fee that gets added to your debt when you shift a balance. Here's how much it would cost to clear a £2,500 debt within the interest-free period using the top 40-month and 41-month deals each month.

Credit card

0% balance transfer period

Fee

Cost of £2,500 transfer

Monthly repayment to clear debt of £2,500 + fee

Bank of Scotland Platinum 40 Month Balance Transfer Credit Card

40 months

2.41%

£60.25

£64

Halifax 41 Month Balance Transfer Credit Card

41 months

3.5%

£87.50

£63.11

As you can see going for the second best deal will save you £27.25 overall. You just need to be able to hand over £64 a month instead of £63.11, which is something most could probably stretch to.

The cheapest balance transfers

If you have smaller debts and are really confident you can pay them back over a shorter period there are cards with much cheaper fees and some that are even fee-free.

Compare 0% credit cards

How to Get a Credit Card