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What is a balance transfer credit card?
If you’re struggling to pay off an existing credit card debt, you could move your debt to a card with a long-term balance transfer offer. Then you can repay your credit card with no interest for up to 29 months.
Before you get started, you can use this guide to compare credit cards with a long interest-free balance transfer and discover the features you should consider before you apply.
What is a long term balance transfer card?
A long term balance transfer credit card offers a 0% interest rate on balance transfers for up to 29 months. Some other cards may charge no interest for only 6 to 18 months.
Cards with a long interest-free balance transfer deal are designed to help cardholders who have a high outstanding balance or want more time to repay their debt without interest. At the end of the promotional period, any remaining debt will incur a higher rate, so you’ll need to pay off the balance before then to avoid it.
Be aware that making a long term balance transfer doesn’t mean you can take a break from payments. Ensure you make the minimum monthly payment by the due date on your statement.
How to compare long term 0% balance transfer offers
Before you apply for a card with a long balance transfer deal, there are some factors to consider – we’ve set them out below.
- How long is the interest-free period? These cards generally offer 0% on balance transfers for up to 29 months, but the exact promotion will vary between cards. To decide how long you’ll need, consider the size of your debt and divide it by the number of months in the promotional period. This is how much you’ll have to pay each month to clear the debt before the standard interest rate applies. If you don’t think you can afford this each month, consider a card with a longer interest-free period to reduce and spread out your monthly repayments.
- Is there a balance transfer fee? You might be charged a balance transfer fee when you first move your debt. This one-time fee can range between 0% and 4% of the transfer amount. This can eat into your overall savings, so it’s important to compare. For example, if you had £3,000 debt, a 2.5% transfer fee would cost you £75. This £75 fee would be added to the balance and would also be included under the 0% interest free period if offered.
- What is the standard interest rate? At the end of the promotional period, any remaining balance will attract the standard interest rate. Annual percentage rates (APRs) on these types of credit cards usually range between 10% and 34.9% a year. Always aim to repay your entire balance before this interest rate applies, but it’s still worth knowing the rate so you’re not hit with a nasty surprise when the introductory period ends.
- Does the card charge an annual fee? Some cards with a long term balance transfer don’t charge an annual fee for life or at least for the first year. Others charge annual fees that can range from tens to hundreds of pounds. Before you apply, you should make sure that the annual fee doesn’t offset the savings you’ll get from the interest-free period. When you use the balance transfer calculator in this guide, the amount saved column considers both the annual fee and balance transfer fee.
The bottom line
A long term balance transfer credit card can help you get your debt under control without the additional cost of interest. However, it’s important that you plan ahead to ensure you can pay off your debt in full before the standard APR applies to get the most out of your 0% balance transfer card.
Want to know more? Check out our guide to 0% balance transfer credit cards.
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