What To Consider When Comparing Balance Cards | moneyfacts.co.uk

Moneyfacts.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfacts.co.uk will always be from news@moneyfacts-news.co.uk. Be Scamsmart.


Derin Clark

Derin Clark

Online Reporter
Published: 08/07/2021

When comparing 0% balance transfer credit cards many borrowers focus on how many interest-free months are being offered. This introductory interest-free term is important as it is the period that borrowers have to repay the debt before interest is added to the outstanding balance. As such, it makes sense for borrowers to choose with a card with a long interest-free term as this will likely make repaying the debt within this period more manageable. Saying this, if borrowers just focus on this aspect of the card they could find that transferring their credit card debt could be more expensive and instead they should consider the total cost of borrowing.

Total cost of borrowing

The main consideration when looking at the total cost of borrowing with a 0% balance credit card is the balance transfer fees. Often the longest interest-free periods have higher balance transfer fees compared with those that have a lower number of interest-free months. For example, NatWest’s Balance Transfer Credit Card Mastercard offers an interest-free period of 18-months and does not charge a transfer balance fee, whereas Sainsbury’s Bank’s Sainsbury’s 29 Month Balance Transfer Credit Card Mastercard has an interest-free period of 29 months but charges a transfer fee of 2.00%, from a minimum of £3, which would, for example, cost a borrower looking to transfer £2,000 in credit card debt £40 to transfer the balance.

Another factor to consider is the APR, which is the interest added to the outstanding balance once the introductory interest-free period has ended. Although, ideally the outstanding balance will be repaid during the interest-free period, it is not unusual for borrowers to find they are still repaying their debt once the offer has ended, and the amount of interest added will depend on the APR. It is important to remember that although the majority of borrowers are offered the advertised APR, the APR offered to each individual will depend on the borrower’s credit history, so it may be worthwhile doing a credit check first to see the likelihood of being offered the advertised rate.

If you are planning on using your credit card once the balance is repaid you should aim to repay the balance in full each month to avoid falling into future credit card debt. Alternatively, if you need to make purchases and are unable to repay the outstanding balance in full each month, it may be worthwhile getting a 0% purchase credit card, which offers an interest-free period on purchases made using the card. You can compare these cards on our 0% purchase credit card chart.

If you are planning on using your credit card once the balance is repaid you should aim to repay the balance in full each month to avoid falling into future credit card debt. Alternatively, if you need to make purchases and are unable to repay the outstanding balance in full each month, it may be worthwhile getting a 0% purchase credit card, which offers an interest-free period on purchases made using the card. You can compare these cards on our 0% purchase credit card chart.

Opening restrictions

Along with the total cost of borrowing, when comparing 0% balance credit cards, it is also important to consider any opening restrictions. Some credit cards require applicants to have a set minimum income, for example Barclaycard’s Platinum 24 Month Balance Transfer Via is only available to those with a minimum income of £20,000. Other cards will only be available to existing customers. Borrowers should also be aware that some 0% balance credit cards will charge an annual or monthly fee, although this is more common with reward credit cards than 0% balance cards.

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. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. Moneyfacts.co.uk will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

credit cards

Cookies

Moneyfacts.co.uk will, like most other websites, place cookies onto your device. This includes tracking cookies.

I accept. Read our Cookie Policy