If you’re looking for a way to pay off your credit card debt in the New Year, then Halifax has launched a balance transfer credit card allowing you to spread the cost over 40 months, interest-free.
However, to qualify, you must carry out your transfers within 90 days and transfer at least £100. This offer expires on February 15.
Keep in mind too, you will have to pay a fee that’s calculated as a percentage of the amount you transfer.
What is a 0% balance transfer (BT) card?
You can use a BT card to transfer debt from an existing credit card that is charging you interest to a card which is offering a 0% period.
It means that you’ve got that length of time – in Halifax’s case with this card, 40 months – to pay off the debt.
You need to make sure you pay off the balance before the interest-free period ends, or you’ll start paying interest at 18.95% pa (variable) with the Halifax card. The card has a representative rate of 18.9% APR (variable).*
What are the costs?
You will have to pay a fee for transferring over your balance to this Halifax card.
This is charged at 2.95% of the amount you transfer over. For example, if you transfer £500 of debt at 2.95%, you’ll pay £14.75. If you transfer £3,000, it will cost you £88.50.
You must transfer a minimum of £100.
An initial 3% fee applies but Halifax will then refund 0.05% within 90 days, so the effective fee is 2.95%.
You must also make the transfer within 90 days of being accepted for the card, and you also can’t transfer from another Halifax card to this one. After the 90 days any balance transfers will revert to 18.95% pa (variable) with a one-off transfer fee of 3%.
How does it compare?
The Halifax transfer fee charge is relatively high. A number of other BT cards charge 1% or less but they do have shorter interest-free periods.
This means that if you think you can pay off your debts in a shorter time then it may be worth opting for a card with a lower fee.
For example, if you have £1,000 to clear and can afford to pay £50 per month, then you could consider a card with a 20 month interest-free period and a lower transfer fee.
The Halifax card is for people who need the longest time possible to clear their debts.
Virgin offers a 32 month interest-free BT card with a low fee of 0.99% (min £3). On a debt of £3,000, that works out as £29.70.
However, if you don't pay off the balance within the 0% period, you'll be charged 18.9% pa (variable). The card has a representative rate of 18.9% APR (variable).**
Barclaycard also offers a BT card with 32 months interest free and a fee of 1.08% (3.5% after the first 60 days).
Once the 0% deal ends, you'll be charged 18.9% pa (variable). The card has a representative rate of 18.9% APR (variable).**
Use our calculator
Our Balance Transfer Calculator allows you to compare you options, depending on how much debt you have and how much you can afford to pay each month.
Simply enter the amount you want to transfer and the monthly repayment you can afford and it will show you the cheapest option.
It’s important to note calculator assumes you’ll pay the same amount each month. If this isn’t the case, then it may not be accurate.
If you’re worried about being rejected…
Multiple applications for credit card make you look a bit desperate to lenders – so you should be completely sure before you apply.
You can use our ‘Will I get it?’ option on our BT calculator to tell you how likely you are to get a ‘yes’ for the card.
We call it Smart Search, and it allows you to find out which cards are most likely to accept you, without leaving a mark on your credit file.
*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).
**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).
Remember: credit limits and interest rates will vary based on your individual circumstances.
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.