A 0% balance transfer war means it’s now possible to get a super-low-cost loan for up to 27 months
If you were searching for evidence that the credit crisis is over, take a look at the 0% credit card market offering some of “the best deals ever”.
In recent weeks providers have been slugging it out to offer the UK’s most attractive 0% balance transfer credit card, and it’s now possible to get super-low-cost loans for up to 27 months – if you have a good credit record.
At the height of the financial crisis it was hard to find a credit card provider willing to take on your existing card balance – 0% deals were seen as part of the easy finance boom that had got the country into the mess it found itself.
However, that looks like ancient history, with MoneySavingExpert Martin Lewis this week declaring the deals on offer as some of the best ever.
Barclaycard and Tesco Bank are offering those looking to shift existing card balances over to them an interest-free loan until September 2015.
Arguably, though, the better deal comes from Halifax. Those taking out its balance transfer credit card receive 25 months interest free, but the balance fee is just 2% after a refund is applied.
Barclaycard’s transfer fee is 2.99% while Tesco’s is 3.15%.
If you have a good credit history and have the ability to pay the loan off in full at the end of the interest free period, this a super-cheap way to borrow money.
There are a few rules that balance transferrers/new borrowers should aim to follow. If you want to buy a sofa, for example, you would start by applying for the 0% card.
Assuming you are approved, you then go out and buy the sofa using an existing credit card. Once you have done that and the purchase shows up on your account, you then transfer the cost from the old card over to the new 0% one. You usually have to do this within 90 days to keep the interest free offer. It is usually done on online or by phone.
Make sure you set up a direct debit to make the minimum payment each month. Miss even one month’s payment and you lose the 0% offer.
The key to making these 0% deals work is to pay off the loan before the interest free period ends. You can make payments into your card account to bring down the balance at any time.
Fail to do so and interest will start to be applied – at typically over 18%.
Note: it’s best not to use these cards for other spending while enjoying the 0% deal, as it just overly complicates things.
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