I have been updating this article monthly for a couple of years. July 2018 is the first month there has been no change in the best deals on offer from the month before – same card companies, same length of 0% deal and same fee.
These are the table-topping deals. If you don’t have a very good credit rating you probably won’t get one of them. It’s annoying but if you desperately need to move some credit card balances to 0% you may well not be able to get one. But if you don’t have any financial problems, these offers are a great way to get the ultimate in cheap credit.
Always use a soft checker to see which cards you are likely to be offered. If you just apply and are refused, that application on your credit record will make it a bit harder when you apply to someone else.
A good time to refinance your credit card debt
There has been a slow trend towards poorer deals since May 2017. Then you could have got a 43 month 0% balance transfer deal. Since then, either the length of the deals has reduced or the fees have gone up … or both.
If interest rates rise – and once again there are rumours that this may happen next month – it will make it more expensive for the credit card companies to offer 0% deals. With ultra-low interest rates, offering 0% doesn’t cost much, but as rates get higher, the banks have to pay more for the money they borrow to lend to you.
So now may be the best chance you are going to get to refinance your credit card debt.
The best 0% balance transfer offers in July 2018
The following offers were all available in early July:
- the longest 0% periods:
- MBNA is offering up to 36 months (you may get less) with a fee of 1.99%;
- Virgin is offering 36 months (you will get the full term) but at a higher 2.8% fee;
- Barclays is offering 35 months (you will get the full term) at a lower 1.85% fee.
- best sub 1% fee offers:
- Virgin offers 32 months, with a fee of 0.6%.
- Barclaycard offers 3o months, with a fee of only 0.55%.
- best no-fee deals:
- Santander offers 27 months.
- MBNA offers 26 months.
Check MoneySavingExpert for up-to-date news on any recent offers.
Five problems to look out for!
There were 533,000 balance transfers in May 2018. This is big business for the banks and they know on average they will make money from them. See How banks make money from 0% cards and make sure you are the one who profits from these offers, not your bank!
In particular look out for these five catches:
1. Tempted by a long deal but only offered a shorter one
Many adverts say things like up to 30 months, but you could get offered a much shorter time. This is very common. It’s sneaky, but there’s not much you can do about it.
2. Only get a small credit limit
The average size of a balance transfer in May 2018 was only £2,100. If you are hoping to refinance a large credit card balance you may not be able to. Switching some of your debt to 0% is better than switching none, but it may still leave you with expensive card repayments.
3. If you pay late you lose the 0% offer
If you miss a payment or make it late, it’s likely the credit card will end your 0% deal and you are back to high-interest rates. And with a problem now showing on your credit record, you can’t easily get a new deal!
This happens to about a quarter of the people that get these balance transfer deals. The lenders know this – they are going to make high profits from the people who trip up.
4. You end up with too much debt
0% debt is cheap so it may feel like it doesn’t matter, but if you want to get a mortgage or remortgage it does.
Mortgage lenders don’t like you to have a lot of unsecured debt, even at 0% interest. What may seem like a great way now to organise your money now can backfire later when you have to clear large amounts of debt in a hurry so you can buy a house or remortgage.
5. The deal ends…
A significant number of people do not get another deal when one 0% period runs out. This may be because they forget for a few months or because their situation has changed and they can’t get another offer – perhaps their income has reduced or they have too much other debt,
Top tip – turn a 0% balance transfer into an interest-free loan
These 0% balance transfers are a great way to clear debt as all your monthly payments are reducing your balance. But don’t think I don’t need to worry now, it’s free money! but instead really take advantage of them – use the offer as an interest-free loan and aim to repay as much as possible by the end of the 0% period.
If you just make the minimum repayments, the debt won’t be anywhere near cleared by the time the deal runs out, as the minimum amount reduces each month. Instead, divide the amount by the number of months and set up a standing order to repay that amount each month. Then by the end of the deal, your balance will be zero.
This article is updated regularly – latest update July 2018