Britons could potentially save thousands by utilising a balance transfer credit card.
A 0% balance transfer allows you to acquire a new card to aid in paying off the debts on an old credit card. The crucial point here is that while the old card would have a percentage of interest added on to the payback, the new card will not impose such interest for a certain period.
Consequently, any debt on the card could be settled much more easily without the concern of accruing additional debt. However, it’s vital to remember that most banks will only offer 0% interest for a limited duration, so it’s essential to clear the debt before this period ends or you’ll find yourself back at square one.
Guidance from Money Saving Expert emphasises that banking customers are prohibited from transferring balances between the same bank. Individuals will also need to consider their eligibility for a 0% interest card as a credit check will be conducted during the application process.
If you already have a specific card in mind that you wish to transfer to, you can utilise an online tool to verify your credibility – such as those available on MSE or MSE.
How to identify the best balance transfer for you
The market offers a broad range of 0% cards, each with varying terms and transfer fees. It is highly recommended to explore options before making a decision, an easy method of doing this is using a comparison site like Uswitch or Compare The Market.
Even if you have a poor credit score, some cards may still be available. However, it’s crucial to note that the interest added after the typically shorter grace period could be significantly higher than other accounts accessible to those with a better credit score.
Personal finance expert Martin Lewis previously praised 0% balance transfers to help pay off card debts. He said: In practice, it [the 0 per cent APR card] then pays off the debts on the other cards for you.
« So those debts are gone, those cards are now empty. » Alternatively, you now have the same level of debt on the other card, but are now paying 0 per cent interest on it. »
He added: « And the practical point on that is simple. Now all of your repayments towards the card are clearing what you actually owe rather than just servicing the interest and going towards the profit of the credit card company. »
