Find the right balance transfer credit card

Borrowers can avoid paying interest on their debts for up to two years if they choose the right credit card – but remember to factor in balance transfer fees.


Interest-free offers on balance transfer credit cards are particularly competitive at the moment, but the upfront balance transfer fees you pay to benefit from them have risen in recent months.

The average balance transfer fee is now close to 3%, with some deals charging significantly more than this. Halifax, for example, currently offers one of the longest 0% deals on the market at 22 months. After the introductory period ends, the card has a representative annual percentage rate (APR) of 17.95% (variable).

But this deal comes with a whopping 3.5% fee, meaning that someone transferring £3,000 on to the card would pay £105 for the privilege – this doesn’t have to be paid up front, it will be added to your balance.

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%. Applicants will need to hurry too, as the deal is being pulled on February 1 and it’s unlikely to be replaced by anything as appealing.

Anyone with £3,000 to transfer would therefore pay £96 for the privilege of having the card, which also offers three months at 0% on purchases and has a representative APR of 17.9% (variable).

While this is worth doing if you need 24 months to clear your debts, it may be more cost effective to opt for a shorter 0% deal with a lower fee if you think you can pay off what you owe more quickly.

Kevin Mountford, MoneySupermarket’s credit card expert said: “As long as you clear your debts within the interest-free period, the balance transfer fee is the only cost you will have to pay, so it makes sense to shop around for the lowest ones.

“It is vital to remember when your 0% period comes to an end, though, as interest payments soon add up once the representative APR kicks in.”

Which cards offer 0% deals with lower balance transfer fees?

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

If, however, 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.

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

You could therefore save more than £70 – as long as you are confident you can pay 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 – this is not unusual on 0% balance transfer offers).

Someone switching across debts of £3,000 would therefore pay £45, while a borrower with £5,000 to transfer would pay £75. Other features of the deal include three months at 0% on purchases, plus a somewhat lower representative APR of 16.8% (variable).

It is worth ensuring that you 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%.

Another option is the Barclaycard Platinum Low Balance Transfer fee card which has a 16-month 0% period but the fee is slightly higher at 1.6%. The longer interest-free period could make the higher fee worth paying.

Watch out though: This card has a higher-than-average representative APR of 18.9% (variable), meaning that just a short stint paying interest on your debts could make it a much more expensive option than one of the deals with a large balance transfer fee.


Is there any way to completely avoid balance transfer fees?

If you want to pay 0% on your debts, then you will have to pay a balance transfer fee of some kind.

You can, however, completely avoid a balance transfer fee by opting for a long-term low-rate card such as Barclaycard Platinum Simplicity.

It does not have an introductory 0% offer, but it does have a low representative APR of just 7.9% (variable) as well as a rewards scheme.

It is therefore a good choice for anyone keen to find a card that they can keep and use for years to come. Nectar customers could also consider the Sainsbury’s Low Rate Credit Card, which has a representative APR of 6.9% (variable) and imposes no balance transfer fees.

As with the market-leading deals mentioned above, however, you will need an excellent credit score to take advantage of these low-rate cards.

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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