Balance Transfer Credit Cards: Some banks promote interest-free deals

Banks have reinstated or ramped up balance transfer deals over the past month as they ease up on lending spigots, but borrowers looking to clear their debts still have fewer options than ever.

MBNA, Sainsbury’s Bank and Virgin Money have all extended interest-free terms on some of their cards, while the supermarket lender also reopened its doors to non-Nectar customers last October after closing shop at the start of April 2020.

It now offers the best 0 percent deal on the market, with up to 29 months for borrowers to settle their debts for 3 percent, although some applicants will have less time to pay back.

Those looking to move their debt into an interest-free deal can take advantage of banks recently increasing term lengths by 0%.

Meanwhile, MBNA increased the duration of interest-free balance transfer terms on two of its cards from 18 and 26 months to 20 and 28, respectively, while also lowering the balance transfer fee on its 28-month deal by 0% from 2.99 to 2.79 percent. .

The moves likely indicate that lenders have a greater appetite for new business amid greater confidence in the UK economy’s recovery.

Credit review agency Experian told This is Money that there were nearly twice as many credit cards available on its website as there were when availability was at its lowest, during the initial shutdown.

It said more card providers had joined over the past month, though banks denied the moves were out of the ordinary.

“It is encouraging that while demand has grown, lenders have also been able to continue to offer a variety of credit products,” said Amir Goshtai of Experian.

“This points to positive signs for the UK credit economy, especially when compared to the first lockdown.”

However, TSB cut its previously market-leading 0 percent period from 29 months to 28 on Wednesday, while its slightly lower fee of 2.95 percent means the best balance transfer deal just got a little more expensive.

Sainsbury’s also raised the cost of transferring balance to the low fee card for 26 months from 1.85 per cent to 2 per cent of the amount being transferred.

What banks have mixed their credit card deals?
Bank Old deal new deal date of change
Sainsbury’s Bank Balance transfer credit card: 28 months without interest on balance transfer
Low Fee Balance Transfer Credit Card for 26 Months: 25 months interest free balance transfer – 1.85% fee
Double credit card: 20 months without interest on balance transfers and purchases
Low Fee Balance Transfer Credit Card for 18 Months: 18 months interest-free on balance transfer – no fees
29 months without interest
26 months interest free – fees raised to 2%
Interest-free term for balance transfers and purchases reduced to 19 months
Fees have been increased from 0% to 0.5% in some cases
December 22nd
Mbna 0% credit card transfer: 18 months interest free on balance transfers and purchases – BT fee of 2.75%
0% Long Balance Transfer Credit Card: 26 months interest free – 2.99% fee
20 months interest free – Fee raised to 2.99%
28 months interest free – fees reduced to 2.79%
Jan 7th
TSB Platinum Credit Card for Balance Transfer: 29 months interest free balance transfer – 2.95% fee 28 months without interest Jan 6
Bakr money Balance transfer credit card: 25 months without interest on balance transfer
Universal credit card: 18 months without interest on balance transfers and purchases
26 months without interest
18 months without interest on balance transfers and purchases
December 14th
Source: Moneyfacts.com

And despite these recent improvements, the availability of interest-free credit card deals also remains at an all-time low.

There were 55 balance transfer deals available on Moneyfacts on Friday, down from 60 at the start of December and 75 in December 2019. And in January 2017 banks offered borrowers up to 43 interest-free months to pay off their debts.

What are the best offers?

Sainsbury’s Bank now offers their longest-running balance transfer deal, with 29 interest-free months available from the date the card is issued. It charges a fee of 3 per cent on the amount transferred with a minimum of £3.

The minimum payment per month is 2.25 per cent of the statement balance, or £5, whichever is higher, while also offering 0 per cent interest-free on purchases for three months and a representative annual interest rate of 21.9 per cent.

The number of 0-percent purchase tickets available is also near an all-time low, with only 54 available, Santander offering the longest available.

The MasterCard All-in-One Credit Card comes with a fee of £3 per month, but offers 26 months of interest-free on purchases and 0.5 per cent cash back on all purchases. It has a representative APR of 21.7 percent and also offers 26 months interest-free on balance transfers.

Banks usually adjust their tenure lengths in January as they crowd out new business, as households often look to cut the cost of Christmas spending, but there were fewer moves this year than usual, according to Moneyfacts.

The slight rebound in balance transfer deals comes after banks tightened the availability of unsecured credit such as credit cards and loans between July and September last year, and were expected to do so again in the last three months of the year, according to a survey of lenders. Bank of England.

“Borrowers using a 0 percent deal will also find time to repay before the interest defaults, so they’re more inclined to pay off debt sooner than they were years ago,” Rachel Springol said.

Britons have largely avoided their credit cards over the past 12 months during coronavirus lockdowns, with record amounts of personal debt being paid off since the first in March.

Another £900m of credit card debt was paid off in November, according to the Bank of England, while only 53.9 per cent of credit card balances were interest-bearing in September, according to UK Finance Trade.

Borrowers who are in debt can apply for a payment holiday on their credit card or personal loan for up to six months, provided they don’t take a payment break.

They must apply by the end of March 2021 and all pay holidays will end in July.

‘It’s a positive sign that card debt has been paid off, but there may still be those who are in debt and should seek advice from a debt charity if they need help,’ Rachel Springol added, while those with bad credit history are also unlikely. To be accepted for the longest interest free term available in the market.

The small print: READ THIS BEFORE APPLYING

Getting approved for a balance transfer card is by no means guaranteed.

In theory, those with the best credit rating are more likely to be approved for the card, as they will have a history of paying debts on time.

Those with poor credit ratings are more likely to be rejected or offered less attractive terms such as a higher interest rate or a shorter interest-free period.

Those who are rejected should keep in mind that applying for a number of other balance transfer cards in a short period of time will cause their credit rating to deteriorate.

Many card providers will not allow you to transfer balances from other products of their own, so you should determine the best deal for you outside of your current provider before placing an order.

Some providers may only accept your application if you already hold a checking account with them.

There are other restrictions such as a minimum income – generally between £10,000 and £20,000.

To take advantage of the 0 percent introductory offers, you may have to transfer your balance within a specific time frame.

Most credit card providers increase the handling fee after the first 60 or 90 days.

What about a card with no fees?

Borrowers who are happy to pay off their balance in a short amount of time may also want to consider a balance transfer card that doesn’t come with a fee.

There are fewer available than last year but seven deals are still available, though This is Money only includes those cards that don’t come with the same fees.

Of the five with no fees, the longest are offered by Sainsbury’s Bank and Santander and come with 18-month interest-free terms.

Balance transfer cards with the longest fee-free terms
Credit card April rep Long term without interest Minimum payment
Santander Everyday Credit Card MasterCard 18.9% 18 months 1% or £5 per month
Sainsbury’s Bank Low Balance Transfer Fee for 18 months on the Mastercard credit card 21.9% 18 months 2.25% or £5 per month
Barclays Platinum Card for 15 months, without balance transfer fees 21.9% 15 months 2.25% or £5 per month
Danske Bank Standard MasterCard 22.9% 5 months 3% or £5 per month
TSB Advance Credit Card from MasterCard 7.9% 3 months 1% or £5 per month
Source: moneyfacts.com

However, Sainsbury’s low-fee card may charge you 0.5 per cent in some cases, while it comes with 0 per cent interest-free on purchases for three months and an annual interest rate of 21.9 per cent – although most use a balance transfer card To transfer and pay off debts instead of adding to them.

Meanwhile, Santander’s Everyday MasterCard credit card has an APR of 18.9 percent and also offers 0 percent interest-free on purchases for three months.

Its term of 18 months starts from the date of transfer, unlike the Sainsbury’s Card which starts from the date the card is issued.

The trade-off means that in exchange for no fees, borrowers have less time to pay off the balance, which means higher payments each month.

What is the cost of liquidating your interest-free balance?
The balance being transferred Balance transfer fee with Sainsbury’s Bank Monthly payment with Sainsbury’s is required to clear balance in 29 months A monthly payment with Santander is required to clear the balance in 18 months
£3,000 £90 £103.45 £166.67
£5,000 £150 £172.41 £277.78
£10,000 £300 £344.82 £555.56

We compare how much extra this would cost compared to the longest tenure available on the market, a 29 month Sainsbury’s with a 3 per cent fee, if borrowers wish to transfer £3,000, £5,000 or £10,000.

Sainsbury’s turns from £3,000 to £3,090, £5,000 to £5,150 and £10,000 to £10,300, but cuts the required payments by £63, £105 and £211 per month respectively.

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