Halifax raises the benchmark for 0% balance transfer deals - no interest or fees for two years
It’s the joint longest genuinely free balance transfer deal, though it has slightly more flexible terms than the AA Balance Transfer Card, which it matches. Halifax, for example, offers 24-months interest-free for all balance transfers over £100, while the AA only offers 24-months at 0% for people transferring more than £500.
However, only 51% of people who successfully apply for the Halifax deal will be offered the full two-year 0% interest period at 18.9% APR after.
Other people who qualify for the card will only get a 13-month interest free balance transfer window and will be charged either 21.9% or 25.9% APR after.
The AA card charges 19.9% APR representative after the 0% period, though people who don’t qualify for the advertised rate will be charged up to 22.9% APR. All successful applicants will receive the full interest free period – 22 or 24 months, depending on the amount transferred.
While this is the strongest deal if you can repay your card debt over two years, anyone looking to pay down a larger credit card debt might want to consider a longer interest-free period.
Several lenders, including MBNA and Halifax, offer interest-free balance transfers for up to 40 months. However, these deals typically have fees of between 2.5% and 3%, meaning a £3,000 balance transfer could cost between £75 and £100.
Also, don’t forget that if you go over your credit limit, or don’t make the minimum repayment each month, the card provider might cut your interest free-period short and start charging interest.
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%.