Barclaycard halves balance transfer fees
Filed under: Credit Cards
From today, the market leader in credit cards, Barclaycard, is halving the transfer fees it charges customers for moving expensive card debts to one of its 0% balance transfer credit cards.
Pay no interest with 0% balance transfers
Although the Bank of England's base rate has been firmly stuck at 0.5% a year since March 2009, the cost of borrowing on credit cards continues to creep up. If you spend on your plastic and don't repay your balance in full every month, then you'll pay steep rates of interest on this debt.
Right now, the average yearly interest rate charged by credit cards is over 19% APR. This means that a typical credit charge will charge interest of £190 a year on a flat balance of £1,000. This is an extremely expensive way to borrow money, especially in the long term.
This is where 0% balance transfer cards can save you a fortune. By transferring your existing card balance(s) to a 0% deal, you can avoid paying any interest on these debts for an extended period.
In fact, the longest 0% periods currently on the market lasts for 23 months, giving you nearly two years of interest-free credit.
Don't forget the fee
However, there is a catch, as all 0% balance transfers charge you a fee for moving your existing balances to them. Typically, this fee is 3% of the sum transferred, which comes to £30 for every £1,000 shifted across.
Therefore, when weighing up 0% balance transfers, you must check two things:
- How long the 0% offer lasts (the longer, the better).
- How much the fee is (the lower, the better).
The best balance transfer deals
To save you the hassle of shopping around, I've already crunched the numbers for you. I've ranked these five Best Buys from best to worst:
Given the strong similarities between these deals, you can see how fierce the competition for balance transfers is. All five cards have a standard purchase rate of 17.9%, while all five balance transfers last from 21 to 23 months.
Nevertheless, the two Barclaycard deals are the clear winners, even though HSBC's 0% deal is longer at 23 months. This is because both Barclaycards charge a transfer fee of just 1.45% until 9th August (after which the fee doubles to the original level of 2.9%). In contrast, HSBC's transfer fee is 3.3%, NatWest's is 3.2% and Halifax's is 3.5%.
Why Barclaycard is the winner
To see how much cheaper the two Barclaycard deals are, take a look at the table below. This shows the fee payable on each £1,000 transferred, plus the monthly cost of this fee when spread over the life of each 0% deal:
All three remaining deals are at least twice as expensive as the Barclaycard deals, thanks to transfer fees of £1.43 a month at HSBC, £1.45 at NatWest and £1.59 a month at Halifax.
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