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Save over £70 a year using a money transfer card

Save over £70 a year using a money transfer card

Category: Credit cards

Updated: 09/02/2016
First Published: 09/02/2016

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The credit card market continues to thrive, which is great news for borrowers looking for low or interest-free deals on purchases and balance transfers. Credit cards designed for money transfers shouldn't be overlooked either, as they can often be an innovative way of tackling expensive debts, such as bank overdrafts.

In fact, our latest research shows that borrowers could save over £70 a year in overdraft charges by using an interest-free money transfer card instead: borrowing £500 through a money transfer would cost just £8.45 with a card charging a one-off fee of 1.69% (the lowest currently available), while average charges of £82.56 a year (£6.88 per month) would be levied if £500 was borrowed using an authorised overdraft facility*.

You needn't even worry too much about the fee, as borrowers would still save over £60 even if a money transfer card charged a higher, and typical, fee of 4.00%. Below is a list of the top money transfer credit cards currently available, covering those that offer the longest interest-free terms as well as the lowest fees:

Longest introductory 0% money transfer credit cards 0% interest MT deal Introductory MT fee %
Virgin 40 Month Balance Transfer Credit Card MasterCard 40 months 4.00
Virgin 38 Month Balance Transfer Credit Card MasterCard 38 months 4.00
Virgin 36 Month Money Transfer Credit Card MasterCard 36 months 2.39
MBNA Platinum 24 Month Balance Transfer Credit Card Visa 36 months 2.99
Virgin 36 Month Balance Transfer Credit Card MasterCard 36 months 4.00
Tesco Bank Clubcard Credit Card for Money Transfers MasterCard 35 months 3.94
Lowest introductory fee 0% money transfer credit cards 0% interest MT deal Introductory MT fee %
Virgin 32 Month Money Transfer Credit Card MasterCard 32 months 1.69
MBNA Platinum 32 Month Balance Transfer Credit Card Visa 24 months 1.94
Fluid 32 Month Balance Transfer Card Visa 24 months 1.99
MBNA Platinum Low Fee Credit Card Visa 24 months 1.99
Virgin Atlantic White Amex/Visa 6 months 2.00
United Airlines Mileage Plus® Amex/Visa 6 months 2.00
0% interest terms and fees shown are introductory.
MT = Money transfer.
Intro MT fee = MT handling fee.
Compiled 9.2.16

"It's clear that customers sitting in the red can save on high overdraft fees by making a cost-effective money transfer using one of the great deals on offer today," said Rachel Springall, finance expert at Moneyfacts. "These cards are also useful for people who may already be in credit but who need extra cash for emergencies.

"The most important fact to remember about money transfer cards is that customers don't get 'free money'; there is always a handling fee to pay for making transfers and these vary considerably depending on the type of card and the interest-free term it carries. However, money transfer cards can be a great way to give borrowers a bit of breathing space, although they must strive to clear the balance before interest applies. A borrower being charged the average money transfer rate of 21.7% per annum would pay around £9 a month in interest on a £500 balance**."

Notes:

*Moneyfacts.co.uk's average monthly authorised overdraft usage fee of £6.88 (on accounts without a monthly or annual account charge) would total £82.56 a year if borrowers used their overdraft for 12 consecutive months. The cost of making a one-off money transfer of £500 based on a handling fee of 1.69% would be £8.45. The cost of making a money transfer of £500 based on a handling fee of 4.00% would be £20.

**The interest cost of a £500 balance on a credit card charging 21.7% per annum is based on a minimum repayment of 1% plus monthly interest or £15, whichever is higher. It would cost around £9 a month, or £100 a year.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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