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Get back in control with a balance transfer card

Get back in control with a balance transfer card

Category: Credit cards
Author: Leanne Macardle
Date: 24/01/2019

Christmas may be long gone, but unfortunately, many people will still be feeling the effects on their wallets, as credit card bills arrive and send shivers down the spine of many a consumer. If you're wondering how you're going to repay the debt – without interest making it even more difficult – it could be time to consider a balance transfer credit card.

How can a balance transfer credit card help me?

A balance transfer credit card can give you some respite while you make plans to clear your outstanding debt. Essentially, it allows you to transfer the balance held on one credit card to another, and for a certain length of time, the new card won't charge any interest on the amount transferred.

This can prove invaluable for those trying to escape from the spiral of debt, as continually escalating interest payments can make things incredibly difficult. By getting rid of that interest, you'll have the time to repay the original balance without it edging up every month, making things far simpler. You could have plenty of time to clear it, too, with some cards offering 0% interest on balance transfers for as long as 32 months, such as with this deal from Post Office Money.

However, as with any form of credit, it's vital to stay sensible and bear a few rules in mind, the most important being that you still need to make at least the minimum payment every month, otherwise the interest-free offer could be revoked and your credit score impacted. Try not to spend on these cards, either – doing so will completely defeat the object as you won't actually be clearing your debt, and the interest rate on purchases will likely be substantial – and make sure you repay the balance by the time the interest-free period ends, otherwise interest will be reinstated and you'll face that rising bill again.

Luckily, there's an easy way to do that – all you have to do is divide the total balance by the number of months the interest-free deal runs for, and voila, you've got the minimum amount you need to pay off each month. This will likely be higher than the minimum payment set by your credit card provider, but it makes sense to stick to it if you want to be debt-free by the end of the term.

Find the best balance transfer deals

So, the question is, just how can you find the best balance transfer deals to suit your needs? Our Best Buys should be your first port of call – here, you'll find all the best balance transfer cards, ranked according to the length of the interest-free term – but it's important to remember that what makes a great deal for someone may not work for everyone else.

You'll want to take things like balance transfer fees into account, together with how much debt you're in and how long you think it'll take to clear it. In some cases, opting for the longest 0% term isn't necessarily ideal – not only will you still be paying off the debt years from now, but the fees could mean you'll actually end up paying more, so make sure to do a few calculations.

Take the HSBC deal that's currently sitting at the top of our Best Buys. It's got the joint-longest balance transfer term available of 32 months, but it comes with a fee of 1.40%, which on a balance of £3,000 equates to an additional £42 (remember that this factors into your credit limit, too). Some fees are even higher – 3% is common – which can add even more to your bill, depending on how much you're looking to transfer.

Compare that with Santander's All in One Credit Card Mastercard, which boasts a 30-month 0% term and is fee-free, saving you that extra cash and only sacrificing two months of interest-free grace. This highlights the fact that the longest term isn't always the best, but it of course comes down to your own personal requirements, and you'll want to make sure you can afford the necessary repayments each month no matter what interest-free term you pick.

How to improve your credit score

It's worth pointing out that you'll need to make sure your credit score is up to scratch if you want to be eligible for the best deals, because if you don't make the grade, you may be offered a shorter interest-free term or be declined the offer altogether. This is why it's so important to check your score using a credit check provider – many, such as Experian, offer free access to your credit report – and if you spot anything that seems amiss, it's time to take steps to improve it.

You can find out more about how to improve your credit score by reading our guide, but a few steps you may want to take include making sure you're on the electoral roll at your correct address, always making at least the minimum payment on any credit commitments – but ideally paying off more – and closing any unused credit accounts so lenders don't think you already have access to too much credit. Once you've built up your score, or if you've already got a good one, you're free to compare balance transfer credit card options and get back in control of your finances.

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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