Only a year ago, I was raving about the new record-longest 0pc balance transfer deal nearing two years that wouldnt even merit a mention now.
Yet length isnt everything. When you shift debt, there is a one-off fee related to the amount transferred. To spell it out, that means if the balance transfer fee is 3pc and you transfer a grand, you will owe £1,030.
So to minimise the fee, use my table below to pick a card where the 0pc length comfortably gives you enough time to repay in full, but no more.
The potential savings are huge. Someone owing £5,000 on a standard 18.9pc card, repaying £200 per month, would take 32 months to clear the card at a cost of £1,270. Shifting it to Halifax would clear it six months quicker at a cost of just £135.
If you need longer to pay and have a decent credit score, then become a credit card tart. That means disloyally shifting the debt again to a new card a month before the 0pc deal ends.
3. Find out if youll be accepted without hitting your credit score
To get a card you must pass a credit check. This is done by a scoring system that predicts your future behaviour based on your past. Each card provider will have its own bespoke wish-list of desirable customer types so dont assume a rejection by one card means all others will reject you, too. The balance-transfer eligibility checker at moneysavingexpert.com/BTeligibility tells you your odds of getting each card which substantially reduces the risk of rejection, and also includes some easier-to-get deals.
It does this by running a soft search (the type lenders should use but dont). This means that while you can see it on your credit reference agency files, lenders cant, so it will have no impact on future credit checks.
If only that were the end of it. All the APRs listed on the table show a representative rate, meaning only a guaranteed 51pc of accepted applicants will actually get the rate advertised; the rest can be charged more (though hopefully youll have cleared the card by then anyway). Worryingly, though, were also seeing a new trend of representative 0pc deal durations (Ive marked them in the table), meaning only 51pc must get that length; others a shorter period.
I suspect its the growing use of this rate for risk pricing that is partly responsible for such super-long deals now. Its far easier to advertise a very long 0pc deal if not all customers are entitled to it.
4. Lock in card debts at 6.9pc for life
If you can repay quickly, shifting to 0pc wins. But if you need certainty for longer, youre unsure of your repayments, or you just want to play safe, then consider a life-of-balance card. MBNAs new Rate for Life card is the market leader here. Accepted card customers can lock in any debt shifted within 60 days of opening the card, at 6.9pc APR, and that lasts until all the balance-transferred debt has been repaid.
5. Balance transfer without a new card
While the offers tend not to be quite as strong, if youve space on your credit limit, your existing card provider may allow you to shift card debts to it from elsewhere call up and ask. Barclaycard typically offers 6.9pc with a 2.9pc fee, and MBNA cards often give short term 0pc deals.
The advantage of doing this is that theres no mark on your credit file.
6. The balance transfer 'golden rules
Getting the right card isnt the end of the game. You need to operate it correctly, using these simple rules. Always, a) Repay at least the set monthly minimum, or you may lose the 0pc or promo rate; b) Aim to clear the debt or shift again before the 0pc ends, or rates rocket; c) Dont spend on these cards, it isnt usually at the cheap rate; and finally, d) Beware borrowing elsewhere itll compound the problem.
7. Shift your overdraft to a 0pc credit card
Debit card spending may feel better than credit. But if youre overdrawn, they are debt cards too, and often with higher interest costs and hideous bank charges if you go over. However, the Virgin card lets you do a money transfer, where instead of paying off another card it simply pays cash into your bank account, meaning you can shift overdraft debts to it at 26 months: 0pc for a one-off 4pc fee (for normal transfers its 2.99pc, meaning you can use it for both).
8. Always pay by direct debit to avoid late fees/missed payments
Forget to repay in a month, or do it late, and you risk losing any 0pc deals, being fined or getting a hit on your credit score. Paying only the minimum is usually a bad idea but thats not what Im suggesting. The idea is you use the direct debit to ensure you never have a problem, but then pay more manually on top, too.
9. Dont repay all cards equally
Focus all spare cash on clearing the card with the highest APR, as thats the costliest one just pay the minimum on the others. Then once thats clear, shift your focus to the second costliest, and so on. This is called snowballing, and will get you debt-free far quicker.
10. Not sleeping due to your debts?
The solutions above are for cutting debt costs. But if youre struggling to meet even your minimum repayments, or you have non-mortgage debts bigger than a years salary, or are feeling panicked and worried then youre likely to be in debt crisis. If so, ignore the above tips, theyre not right for you.
Instead, get free, one-on-one debt counselling help from the non-profit agencies citizensadvice.org.uk, stepchange.org or nationaldebtline.co.uk; or, if youre struggling emotionally too, capuk.org. Theyre there to help, not judge you. The most frequent comment I hear from people whove used them is: I finally got a good nights sleep.
Longest 0pc deals
Representative 0pc period so some may get a shorter period. Source www.moneysavingexpert.com/bts
Martin Lewis is a specialist broadcaster and journalist who created MoneySavingExpert.com. You can join the 8 million people in the UK who get his weekly tips emailed at moneysavingexpert.com/latesttips
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