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Category: Credit cards Date: 12/17/2010
Transferring your credit card balance to a long 0% balance transfer deal is a great way to save money, particularly after an expensive festive season where you've had to lean on your flexible friend a little more than you would have liked!
A long 0% Balance Transfer Credit Card doesn't charge you interest on debts you transfer to the card for a set period.
The top cards currently available (Virgin, Barclaycard and MBNA) offer a massive 16 months interest free. Although you will be charged a Balance Transfer Fee for moving your debt onto a new card, typically 2.9% to 3.0% of the balance transferred, paying 3.0% is still economical if you are presently paying 18% (or more) interest on your debt!
Barclaycard £20 refund offer
To make transferring your debts onto its 0% balance transfer card even more rewarding, Barclaycard is offering you a £20 refund from the Balance Transfer Fee if you transfer a balance of £3,000 or more to its Platinum with Balance Transfer Visa before 31 January 2011.
The £20 will be credited to your Barclaycard account provided you transfer your balance within 60 days of taking the card out.
So how does this compare with two of the big three 0% balance transfer contenders?
What balance would I be repaying for…
Barclaycard Platinum with Balance Transfer Visa
MBNA Platinum 16 Month Visa
Virgin Money Credit Card MasterCard
£1,000 transferred?
£1,029.00
£1,028.80
£1,028.90
£2,000 transferred?
£2,058.00
£2,057.60
£2,057.80
£3,000 transferred?
£3,067.00
£3,086.40
£3,086.70
£4,000 transferred?
£4,096.00
£4,115.20
£4,115.60
£5,000 transferred?
£5,125.00
£5,144.00
£5,144.50
£6,000 transferred?
£6,154.00
£6,172.80
£6,173.40
The amount you can transfer onto any of these cards will be dependent on your credit limit, and the terms and conditions of the individual provider. This table is a comment on the starting balance that a lower Balance Transfer Fee can achieve for you. It is not a comment on how long it will take you to repay this balance.
As you can see, the Barclaycard Platinum with Balance Transfer Visa offers the cheapest 'starting' balance for balance transfers over £3,000.
It is worth noting that you still have to pay the full 2.9% balance transfer fee with Barclaycard, but £20 of this is credited back to your credit card account.
When you are transferring a balance between one card and another, you can't normally transfer debts you already have with a card provider onto a promotional 0% deal offered by that same provider.
The Virgin Money Credit Card MasterCard is operated by MBNA for instance, so you couldn't transfer a balance from your Virgin card to another MBNA card and vice versa. Similarly, if you have a balance already with Barclaycard, you won't be able to transfer this onto the 16 month deal offered by the Platinum with Balance Transfer Visa.
Once you have transferred over to your new card, whether it's the Barclaycard, MBNA, Virgin or another provider, it's important to pay down as much of your debt as you can during the introductory period.
Imagine it like this: you've been shipwrecked and you're miles from the nearest land. The seas are really choppy. A 0% Balance Transfer Card effectively calms the sea. Now, you wouldn't use the opportunity of calm seas to just tread water, you'd use it to swim as close to land as you could before the choppy seas return, wouldn't you? Well that's exactly how you should view a 0% Balance Transfer Credit Card.
Of course you could transfer your debt again when the 0% deal comes to an end, onto another 0% Balance Transfer Card. This is a great and efficient way of managing your debt – but only if you have a plan. If you are forever treading water you are only postponing the inevitable pain of biting the bullet and repaying the money you have borrowed…
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 anytime.