If you’re looking to transfer credit card debt to a better home, choosing the longest 0% interest credit card deal won’t always be the cheapest option.
That’s because many of the lengthiest interest-free deals come with hefty transfer fees which boost the overall cost.
Depending on how much debt you need to shift, this means it could be cheaper to opt for a card that has a shorter 0% window but no fee.
And that’s where the new AA Balance Transfer credit card comes in.
The AA Balance Transfer credit card offers 22 months at 0% on balance transfers made in the first three months, and there’s no transfer fee to worry about.
After the 0% introductory offer is up (or if you don’t transfer your balance within three months), you’ll pay a representative rate of 19.9% APR (variable)*, so try to clear your balance before then.
The card also offers a 40% discount on AA European breakdown cover on trips of three days or more, so long as you book before April 2016. T&Cs apply.
Is this for you?
The AA credit card doesn’t have the longest 0% introductory offer on the market – after all, it can easily be beaten by the Barclaycard Platinum credit card with extended balance transfer, offering 37 months at 0% with a 2.55% fee (so long as you transfer a balance within 60 days, otherwise the fee is 3.5%).
Once the 0% window ends, you’ll pay a representative rate of 18.9% APR (variable)**.
Remember, balance transfer fees are calculated as a percentage of the amount you are transferring over.
However, if you don’t need as long as three years to clear your debt – perhaps because your debt isn’t huge or you can afford to pay off a relatively large sum each month – the AA Balance Transfer credit card could be a cheaper choice thanks to its lack of fees.
Let’s say you have a debt of £3,200 and pay off £150 a month.
With the AA card, you’ll clear your debt within the 22 month 0% window and won’t pay a penny in fees or interest.
In comparison, with Barclaycard, you’ll easily clear your debt within the 37 months, but you’ll also pay a transfer fee of £81.60.
Even if you can’t quite pay off your balance in full before the 22 months are up, the AA card could still win out.
For example, if you have debt of £3,200 and you pay off £130 a month, it will take you 25 months to clear your balance with the AA card and you’ll pay £9 in interest, but no fees.
With the Barclaycard, you won’t pay interest but will once again pay £81.60 in fees.
If you’re feeling confused, don’t worry – our handy balance transfer calculator weighs up your debt against the monthly payment you can afford to make to find the best card to suit you.
What makes it special?
The AA credit card is the most competitive fee-free 0% balance transfer credit card on the market.
Although the Santander 123 credit card offers a slightly longer 23 months interest-free on balance transfers and charges no transfer fee, it comes with a £24 annual fee, rising to £3 a month (or £36 a year) on January 11.
After the 0% window is up, you’ll pay 12.7% pa (variable). This is equivalent to a representative rate of 16.5% APR (variable)***.
Watch out for
Remember that to qualify for the AA credit card’s 0% offer you must transfer your balance within three months.
Also note the AA card is issued by the Bank of Ireland, so you won’t be able to transfer a balance from another credit card issued by this bank, including the Post Office.
Finally, you’ll need a good credit score to qualify for the AA card. If your credit rating isn’t up to scratch, you might be charged a higher rate of interest once the 0% promotional offer ends.
What else is worth a look?
If you need longer than 22 months to clear your debt but don’t need as long as 37 months, there are plenty of other options – many of which come with low transfer fees and therefore offer a compromise.
The Barclaycard Platinum 32 months balance transfer card offers interest-free balance transfers for 32 months and has a low fee of 1.39%, so long as you make a transfer within 60 days – otherwise you’ll pay 3.5%.
After the 0% deal ends, you’ll pay a representative rate of 18.9% APR (variable)**.
Alternatively, the Post Office Money balance transfer credit card offers 0% on balance transfers for 26 months with a 0.33% fee. Transfers must be completed within three months. After the 0% deal ends, you’ll pay a representative rate of 18.9% APR (variable).**
* Representative Example: If you spend £1,200 at a purchase interest rate of 19.9% p.a. (variable) your representative rate will be 19.9% 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).
***Representative Example: If you spend £1,200 at a purchase interest rate of 12.7% p.a. (variable) with a £24 annual fee your representative rate will be 16.5% APR (variable).
All credit cards are subject to status and terms and conditions. Over 18s, UK residents only. Terms and conditions apply. See MoneySuperMarket.com for further information.
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.