Sainsbury's Bank launches longest ever 0% balance transfer card - but it's not the cheapest
Sainsbury’s Bank has stretched the longest 0% balance transfer deal to an unprecedented 42 months, creeping ahead of the pack of MBNA, Halifax and Virgin Money, which all offer 41-month interest-free deals.
However, these ultra-long credit card deals come with relatively high fees, and borrowers could pay far less by opting for a shorter repayment period. Fees on 41-month balance transfer cards range from 3.29% to 3.49%, and the new card from Sainsbury’s Bank charges an even higher 4%, equivalent to £120 on a £3,000 balance transfer.
- See our balance transfer guide for the best buys
The timer on the interest-free period begins when you get the card, not when you transfer the balance, which Sainsbury’s says is normal for most 0% balance transfer deals. If you transfer a balance after three months, the balance transfer fee will fall to 3%, as you only have a 39 month 0% period remaining.
The deal is also not “risk priced,” which means anyone who successfully applies for the card will get the advertised interest rate of 18.9% APR and the full 42 month period.
Anyone who spends £800 on the card at Sainsbury’s before the end of the year will also get 5,000 Nectar points (worth £25), and it also allows people to earn extra Nectar points on additional spending.
Sainsbury’s has also matched Tesco Bank’s previously unrivalled 0% purchases card, which charges no interest for 28 months. The card has the same interest rate as Tesco Bank at 18.9%, and an 18 month 0% balance transfer deal with a 2.89% fee - £86.70 to transfer £3,000.
- See our 0% purchases guide for the best buys for the best buys
The move comes a week after Sainsbury’s set a new record low for personal loans, dropping its rates to just 3.1% to Nectar card holders.
If you’re looking for a long term 0% credit card deal, you could end up paying less overall by opting for a shorter repayment period than what Sainsbury’s Bank is offering with a lower fee. Most people looking to clear a credit card debt won’t need three and a half years to do so.
Halifax, for example, charges no fees and no interest for up to 25 months. Alternatively, Barclays has a card with a 37-month 0% balance transfer period and a 1.5% fee, equivalent to £45 on a £3,000 balance.
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%.