Focus on: MBNA makes 20-month balance transfer comeback

Published:
19 April 2012
Topic:
News,Money,Credit Cards,Product review

There's good news in store for credit card holders who have existing debt languishing on their plastic. MBNA is returning to the market from Monday, April 23 with its Balance Transfer credit card having pulled the deal temporarily in September last year. The card offers a rate of 0% for a generous 20 months on debt transferred from another card.

MBNA's comeback won't knock Barclaycard's Platinum Card with Extended Balance Transfer off its top spot as that offers 22 months interest-free on balance transfers. But it could still prove the best deal for you. We take a look at why in closer detail.

What's the deal?

MBNA's Balance Transfer credit card offers 20 months' zero interest on balances transferred from another card. Transfers (up to a maximum of 95% of your agreed credit limit) must be made within 60 days of opening the account, in exchange for a balance transfer handing fee of 2.99%. The representative Annual Percentage Rate (APR) that will apply to the debt after the 20 months is 18.90% (variable).

MBNA's Balance Transfer card also offers 0% on purchases for the first three months with a representative APR of 16.90% (variable) kicking in thereafter.

Any catches?

The most obvious downside to the MBNA Balance Transfer card is that it doesn't offer the longest 0% period on the market for existing card debt.  Barclaycard's Platinum Card with Extended Balance Transfer and Halifax Balance Transfer credit card, for example, both offer 22 months at 0%, while Barclaycard Platinum Credit Card with Balance Transfer offers 21 months.

That said, all of these deals come with a representative APR of 17.90% (variable) compared to MBNA's 16.90% (variable) - all of which are calculated on a credit limit of £1,200. 

The other downside to the MBNA's Balance Transfer card is that it doesn't accept debt transferred from a card within the MBNA family. As MBNA is Europe's largest credit card provider, this could well mean you won't qualify for the deal.  It might not even be obvious that your card is operated by MBNA - but if the plastic in your pocket is branded with Virgin Money, Manchester United or even Amazon, for example, it is.

The last downside with the card is one that is very unlikely to apply in practice; if you transfer a balance across to MBNA's Balance Transfer card after the first 60 days, not only will this slice of debt be charged at 18.90%, but a higher balance transfer fee of 5.00% would apply. However, there is absolutely no benefit in doing this so the problem should be hypothetical.

What the verdict?

Regardless of the fact that MBNA's Balance Transfer credit card is not market leading, it is still a very welcome addition to the market. This is because it provides consumers who are saddled with credit card debt (which will be racking up an average APR of 17.31% according to Bank of England figures) with more choice.

Choice is crucial as the 'same family' balance transfer rule does not apply exclusively to MBNA.  Barclaycard, for example, won't accept balances transferred from other Barclaycards, and Halifax won't accept balances transferred from any card in the entire HBOS group. Therefore, even if you wanted to get these superior deals in terms of the length of their 0% balance transfer period, you may not qualify. This could present the new MBNA alternative in a very favourable light. 

Top tip

With any of these top balance transfer credit card deals, you will need an exemplary credit score to qualify.  Rushing in headlong and applying for the best cards only to be rejected will damage your credit score further. Thankfully, you can weigh up your chances of being accepted for the MBNA Balance Transfer card before applying with MoneySupermarket's SmartSearch tool.

Even if your credit score is tip-top, make sure you scour the market thoroughly. For example, if you don't need 20 months to pay off your balance, Virgin's All Round Credit Card, which offers 16 months at 0% on balance transfers and six months at 0% on purchases, comes with a much lower balance transfer fee of 1.99%.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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About This Author

Laura Howard

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Content Editor, Money and Lifestyle