MBNA balance transfer card tops best buy table
MBNA is now one of six providers offering 36 months 0% interest on balance transfers. The others are Bank of Scotland, Barclaycard, Halifax, Lloyds and Virgin Money. MBNA now also offers a similar card through its fluid brand.
There's a 2.48% balance transfer fee with the MBNA card (2.79% for fluid). The cheapest balance transfer fee among the leading best buy providers is 1.99%, from Barclaycard.
Most of the top providers only offer 0% balance transfers between credit cards, though these new products also allow 'money transfers' (the ability to take cash from your credit card and pay it into a current account) that allow you to clear other debt, such as overdrafts or even a personal loan.
MBNA and fluid offer a shorter, 20-month term at 0% interest for money transfers and there's an initial fee of 4% of the balance. The only other best buy for balance transfers to accommodate 0% interest money transfers is Virgin Money, which also has a 4% fee.
The APR for the MBNA and fluid cards is 18.9%, matching the other leading providers. However, don't use the cards to withdraw cash as you'll be charged a 5% fee (min £5) and interest of 27.9%.
Interest-free deals are rising in popularity, with the UK Cards Association recently estimating there is no interest due on 41% of outstanding credit card debt.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
Moving money from one account to another, whether switching bank accounts or more likely transferring the outstanding balance on your credit card to another card that charges a lower – or 0% – rate of interest. Some card providers may charge a transfer fee that can be a percentage of the balance transferred.
This is used to compare interest rates for borrowing. It is the total (or “gross”) interest you’ll pay over the life of a loan, including charges and fees. For credit cards where interest is charged at more frequent intervals, the APR includes a “compounding” effect (paying interest on interest). So for a credit card charging 2% interest a month (equating to 24% a year), the APR would actually be 26.82%.