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We show you how to compare 0% balance transfer credit cards to make sure you get the best deal (Updated 4/12/09).
If you’re becoming a slave to unmanageable credit card debts then a 0% balance transfer credit card could ease the burden.
If you switch your balance to a 0% card all your repayments will go towards paying off the capital, rather than interest, and you’ll be able to pay off your debt quicker. However, before you move an existing credit card balance to a new 0% card there are several things you need to take into account. These are:
| Company | Package Name | Balance Transfer Rate & Period | Balance Transfer Notes | % Typical APR |
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Balance transfer cards can be a great way to deal with credit card debt. They allow you to transfer your existing credit card debt to another card where, for a set period, you’ll not have to pay any interest. The best balance transfer deals change all the time so it’s a good idea to check the best buy tables when you’re looking for a new card.
When balance transfer fees first came on to the market a few years ago, so called “rate tarts” used the plethora of deals on offer to continuously switch between cards. By moving their balance every time a deal came to an end, they never paid any interest.
Unfortunately credit card firms wised up to this and started introducing balance transfer fees to deter people from continually switching cards once the promotional period ends. Balance transfer fees are usually a percentage of the balance you intend to transfer. So if you have a balance of £3,000 and the balance transfer fee is 3%, it will cost you £90.
The transfer periods will differ between cards. Some only offer as little as three months but most deals are between six and 12 months. Every so often a card comes along with a 15 or 16 month balance transfer deal which gives you a lot longer to pay off your debt.
If you don’t manage to clear your balance within the 0% balance transfer period, the debt will start incurring interest. It’s important to know the revert-to rate when the 0% period ends. This will be displayed in the summary box which is part of the information you should receive when you take out a card.
Let’s look at a card which offers 0% on balance transfers for 12 month and has a balance transfer fee of 2.5%. If you transferred a balance of £4,578 (the average credit card balance) to the card and paid the monthly minimum payment each month you would save £700 over a year compared to making the same payments on a card with an APR of 13.9%.
Obviously how much you save will depend on how long the 0% balance transfer period is, the balance transfer fee, the rate you would be paying on an alternative credit card and how much you’re able to repay each month. If you just pay the minimum repayment it will take you a lot longer to clear the balance than if you made extra payments.
While credit card companies will dazzle you with enticing offers, it’s important to always remember that these are financial institutions and they need to make money.
Here are a few traps to avoid:
Compare 0% balance transfer credit cards
Advertisment| Company | Package Name | Balance Transfer Rate & Period | Balance Transfer Notes | % Typical APR |
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