Best Balance Transfer Cards: TSB has the longest term of 29 months

Credit card providers surreptitiously cut 0 percent balance transfer windows leaving borrowers to face shorter periods of time to repay debt.

A balance transfer credit card allows customers to pay off debt by transferring the entire debt to the new card, often with the promise of 0 percent interest for a set period of time.

But the duration of 0 percent balance transfer credit cards has shortened in recent years, according to Moneyfacts, which advises those considering getting such a card it might be wise to apply for one sooner rather than later.

The gap between the longer-term option and the no-fee option is now 11 months, with TSB charging a 2.95 percent fee for the transfer but giving 29 months to pay off the debt, while the longest no-fee term is now 18 months.

Three years ago, borrowers could secure credit cards that allowed them an interest-free period of up to 39 months to pay off their debts.

The TSB Platinum Balance Transfer Credit Card offers consumers a 29-month interest-free period, now the longest 0 percent interest offering of any balance transfer card but still a month lower than the same card offered just weeks ago.

“It is imperative that consumers move quickly to take advantage of the best deals as we could see even more discounts in the coming weeks,” said Rachel Springol, financial expert at Moneyfacts.

The TSB credit card offers 0 percent interest for the first three months on any purchases, but a variable fee of 19.95 percent annually will apply after that.

Customers should be aware that the TSB Card applies an upfront fee of 2.95 percent to all transfers made within the 90-day opening period.

This means that when a debt of £3,000 is transferred, a fee of £88.50 will apply.

After TSB, M&S is offering the longest interest-free period with its Transfer Plus credit card, giving customers 28 months to repay, if accepted, with an upfront transfer fee of 2.85%.

The M&S credit card also offers 0 percent interest for the first six months on spending compared to the three months offered by TSB.

An alternative for potential customers is the fee-free balance transfer card which, while offering less generous time ranges for debt repayments, does not charge an upfront fee.

The best no-fee balance transfer credit cards on the market today are offered by Santander and Sainsbury’s Bank, both of which have 0 percent balance transfer rates for 18 months.

This means that for someone transferring a £3,000 debt, they would need to pay £167 a month to pay it off over an 18-month period.

Customers will save money by choosing the shorter fee-free option, Springol said, adding, “The most cost-effective deal depends on how long consumers feel comfortable about having to pay off their debt.”

Mark Gordon, Chief Money Officer at Compare the Market, encourages consumers to use price comparison websites to help determine what works best for them.

Gordon said: “It’s always worth shopping to compare prices and find the best deals online.

“Soft eligibility checks let potential clients know what deals you can be accepted for without hurting your credit score.”

With Equifax reporting last week that the number of new “subprime” borrowers taking out credit cards increased 143 percent between August and September, there are signs that more consumers are facing financial hardship amid the pandemic.

Consumers considering a balance transfer credit card, Springol advised, should check their credit report first to make sure there are no anomalies or missed payments that might be counted against their card application.

She added, “In the coming months, consumers may decide to turn to balance transfer cards to give them some breathing room while making their payments knowing that their debts are interest-free.

“However, it is critical that consumers do their best to schedule a prime date to settle their debt by then, or they may have to switch again, possibly paying a fee to do so.”