Make the most out of banks waging war with balance transfer card offers

Advice from the experts at MoneySuperMarket

Organizer, pen and credit debit cards organization of debts writing payments in diary, bills to pay

Balance transfer credit cards let you transfer debt from one card to another. You usually pay a fee to do so – it's worked out as a percentage of the amount you're moving across – but the reason to do it is simple: you don't pay any interest on your debt for a specified period.

Fierce competition in the balance transfer (BT) card market has prompted leading companies to stretch out the interest-free period, to the point where three of the big guns – Virgin, Tesco Bank and Halifax – are promoting BT cards where you can go for 40 months without paying interest.

That gives you well over three years to pay down your debt without interest adding to the burden.

Watch out for fees

Back to those fees. With the Virgin 40-month card, you pay 2.59%, with a minimum of £3. If you transferred £500, the fee would be £12.95.

Tesco Bank charges 2.69%, edging the fee up to £13.45 on a £500 transfer.

Halifax's 2.9% fee would give a fee of £14.50.

Clearly, the difference in the amount paid in charges increases as the amount transferred grows larger. If we were talking about a £3000 balance, the respective fees for Virgin, Tesco and Halifax would be £77.70, £80.70 and £87.00.

Application deadlines

You can apply for the Halifax deal until 31 March, the Virgin card until 1 April and the Tesco Bank offer until 28 April.

After the interest-free period

Given the length of the interest-free periods these cards offer, it is important not to become complacent and forget that the debt needs paying.

For example, with Virgin, interest kicks in at a rate of 18.9% pa (variable) after 40 months. The card has a representative rate of 18.9% APR (variable)*.

With the Tesco card, once the 0% period is up, you'll also pay 18.9% pa (variable). The card has a representative rate of 18.9% APR (variable)*.

And with the Halifax card you'll pay 18.95% pa (variable) once the 0% deal ends. The card has a representative rate of 18.95% APR (variable).**

Bear in mind...

It's also worth bearing in mind that you cannot transfer debt from one card to another card within the same banking group.

And once you apply, you'll need to make the actual transfer to the new card within 60 or 90 days, depending on the card provider.

Time considerations

It might be tempting to think that, the longer the interest-free period, the better – and many people with card debt will indeed welcome this much breathing space.

But if you don't actually need 40 months to clear what you owe, you could be better of opting for a BT card that has a shorter interest-free period but which also has a lower transfer fee.

An example would be the Barclaycard Platinum 32-month card has a relatively low fee of 0.72%. So a £500 transfer would cost £3.60, while a £3000 transfer would cost £21.60.

But remember, you'd have to clear the debt within 32 months to avoid paying interest at 18.9% pa (variable). The Barclaycard deal has a representative rate of 18.9% APR (variable)*.

Avoid fees altogether

If you think you can clear your outstanding balance in under two years, the Halifax's 23-month BT cardhas no fee. But once the 23-month 0% honeymoon is over, interest is levied at 18.95% pa (variable). This card has a representative rate of 18.9% APR (variable)**.

If you're unsure which card is best for your situation, MoneySuperMarket's balance transfer calculator reckons what you owe against the monthly payment you can afford to make.

*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 18.95% p.a. (variable) your representative rate will be 18.9% APR (variable).

All credit cards are subject to status and terms and conditions. Over 18s, UK residents only. Terms and conditions apply. See for further information.

Please note: any rates or deals mentioned in this article were available at the time of writing.