Tesco Bank launches best buy balance transfer deal
It’s the joint longest 0% period on the market, matching Halifax’s Balance Transfer Credit Card, but with lower fees.
The balance transfer fee is 2.69%, equivalent to £80.70 on a £3,000 balance, marginally cheaper than Halifax’s 2.85% fee (£85.50 on a £3,000 transfer).
The fee for money transfers, which can be used to settle personal loans or overdrafts, is 3.94%, equivalent to £118.20 on a £3,000 balance.
The offer is available to people applying before 28 April 2016. After the introductory period, the interest rate is 18.9% APR representative.
For a roundup of the top 0% balance transfer deals, see our weekly balance and money transfers guide.
If you’re eyeing up the card to clear an overdraft, it’s the longest deal out there. But most people with overdraft debts shouldn’t need 3+ years to clear a balance; so it could be cheaper to pick a card with a lower transfer fee and a shorter 0% window.
There are fee-free balance transfer deals from Halifax and the AA, with 23 month and 22-month 0% periods, respectively, both 18.9% APR afterwards.
The lowest fee for a 0% interest money transfer offer meanwhile is Virgin Money’s 32-month money transfer card. The money transfer fee is 1.69%, or £50.70 on a £3,000 balance, and the APR after the 0% ends is 18.9%.
An overdraft is an agreement with your bank that authorises you to withdraw more funds from your account than you have deposited in it. Many banks charge for this privilege either as a fixed fee or charge interest on the money overdrawn at a special high rate. Some banks charge a fee and interest. And other banks offer a free overdraft but impose very high charges for exceeding the agreed limit of your overdraft.
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%.