Fee-free 0% Balance Transfer Credit Cards For Shifting Debt

By: MoneyFacts

Consumers with unsecured personal debt may opt for a balance transfer credit card to spread their repayments. However, the longest interest-free deal might not be the most cost-effective, as these interest-free cards usually charge a fee each time you switch. Luckily, not all cards apply such a fee.

Research from moneyfacts.co.uk reveals that there are in fact seven fee-free and interest-free balance transfer cards with terms of two years or more available, from Bank of Scotland, Barclaycard, Halifax, Lloyds Bank, Sainsbury’s Bank, Tesco Bank and Virgin Money. Furthermore, there are currently 16 such fee-free cards on the market offering interest-free periods of between one and 29 months.

Rachel Springall, Finance Expert at moneyfacts.co.uk, said:

“It would be wrong to assume that the longest interest-free balance transfer cards on the market are the best for every borrower, as this entirely depends on how much debt a consumer has and how long they are prepared to have it hanging over their heads.

“Just because borrowers can apply for a 42-month interest-free balance transfer card, that doesn’t mean it’s the best choice for their circumstances. A borrower with a £4,000 debt could be charged as much as £131.60 to transfer to such a card. If they can afford to repay around £170 every month over two years, they could apply for a fee-free and interest-free balance transfer card instead.

“A handful of these fee-free and interest-free balance transfer cards offer interest-free periods of two years or more, which can be so useful for borrowers looking to save themselves from any unnecessary fees when switching debt. Consumers may be moving their debt from one card to another to gain a bit more time to repay the balance, but if they’re not careful this could cost them dearly in fees every time they switch on most cards.

“Household debt is expected to rise to a record high next year* and some consumers may well be relying on their credit card for certain expenses. This means that a plentiful number of borrowers sitting on interest-free deals might not be able to repay their debt before their deal ends. It’s important for borrowers to prepare themselves for this scenario and work out the upfront cost of switching before they commit to another credit card; using a fee-free card could be ideal.”

*According to analysts at the Trades Union Congress (TUC).

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