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Best 0% balance transfer credit card term falls below 30 months

Find out what the trend means for you and your credit card debt

Credit card borrowers are facing tighter turnarounds to pay down their debts, as the longest 0% balance transfer deal on the market drops to under 30 months for the first time since 2013.

A 0% balance transfer credit card cuts the interest you are paying on expensive credit card debt, but many of the best deals on the market are shrinking or being withdrawn.

Which? explains what the trend means for credit card borrowers, why providers are cutting their offers and rounds up the best 0% balance transfer deals available now.


Why shorter terms are a blow for borrowers

A 0% balance transfer credit card is a useful tool if you have credit card debt with high levels of interest.

This type of deal allows you to move existing balances from other providers onto the card (usually for a one-off fee) and freeze the interest at 0% for a set period.

Consolidating the debt in one place at a new 0% rate means you can focus on paying down what you owe without wasting any money on interest.

When looking for a 0% balance transfer deal, the length of the interest-free period is important as this impacts how you can spread your repayments to pay back what you owe.

The 0% period on balance transfer deals peaked at 43 months in May 2017 – allowing borrowers to spread repayments over nearly four years.

For someone with £4,000 worth of debt, a 43-month deal meant they could pay £93 a month to clear what they owe in time.

But today the longest-lasting 0% balance transfer deal is just 29 months. This means someone with £4,000 worth of debt would need to pay £138 a month to clear their balance within the two and a half years.

Why are 0% balance transfer deals vanishing?

The length of 0% balance transfer deals has been trending downwards for a while now.

According to the latest Moneyfacts UK Credit Card Trends Treasury report, the average 0% balance transfer term has fallen 30 days in the last three months, to 539 days.

It also points out that the size of the balance transfer market as a whole is shrinking, falling by a fifth over the past year. There are now just 80 credit cards offering a balance transfer deal – well below a peak of 138 seen in February 2007.

The shortening in 0% balance transfer credit cards could be because of new rules imposed by the Financial Conduct Authority to help people in persistent debt.

Since 1 September 2018 credit card companies have to offer helpif cardholders have not begun making sufficient repayments on their balance after 18 months.

After 18 months, firms now have to explain the benefits of higher repayments.  After 27 months, they must remind borrowers again and, after 36 months, a provider may have to offer reduced interest or fees to help customers out.

Under the new rules, the FCA estimates that two million customers will move to faster repayments before they hit 36 months and around 1.4 million will do so at 36 months. Overall, the FCA estimates that customers could save between £310m and £1.3bn ayear in reduced interest charges.

Credit card companies have also agreed to a number of voluntary measures: customers in persistent debt for more than 12 months will not be offered credit limit increases, and all customers will have the option to opt out of automatic rises.

While the rules are good news for those in long-term debt, the credit card market has reacted by reducing 0% periods. This could harm savvy borrowers that move their debt between 0% deals.

The best 0% balance transfer deals

If you have expensive credit card debt, a balance transfer deal can give you breathing room to dig yourself out of it.

You can compare the best 0% balance transfer credit cards on Which? Money Compare.

We’ve picked out the longest-lasting 0% balance transfer deals on the market right now in the table below.

Credit card 0% balance transfer period Balance transfer fee Cost of shifting £2,000 of debt Representative APR
Sainsbury’s Bank 29-Month Balance Transfer Credit Card 29 months 3% £60 19.9%
Halifax 29-Month Balance Transfer Credit Card 29 months 3% £60 19.9%
Tesco Bank Clubcard Credit Card for Balance Transfers and Money Transfers 28 months 2.69% £53.80 19.9%
Sainsbury’s Bank Dual Offer Credit Card 28 months 3% £60 20.9%
Lloyds Bank Platinum 28-Month Balance Transfer Credit Card 28 months 3% £60 19.9%
HSBC 28-Month Balance Transfer Credit Card 28 months 1.4% £28 21.9%
Barclaycard Platinum 28-Month Balance Transfer Credit Card 28 months 1.75% £35 19.9%

Source: Which Money Compare. Correct as of 3 April 2019.

Alternatively, there are a range of fee-free balance transfer credit cards that might be a better option for you. We’ve picked out the best in the table below.

Credit card 0% balance transfer period Balance transfer fee Cost of shifting £2,000 of debt Representative APR
Santander Everyday Credit Card 27 months None £0 18.9%
Santander All in One Credit Card* 26 months None £0 21.7%
Sainsbury’s Bank No Balance Transfer Fee Credit Card 22 months None £0 20.9%

*Card comes with £3 monthly fee

Source: Which Money Compare. Correct as of 3 April 2019.

Keep in mind that any spending on a balance transfer credit card may be charged at an extra rate and start attracting interest straight away. As such, it’s best to avoid using it for purchases or day-to-day expenses.

You should also set a reminder as to when the 0% period is due to end, and make a plan for paying off the full balance by this point.

And if you have an expensive overdraft debt, or need cash in your current account for a purchase, you could consider a 0% money transfer credit card instead.

Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.

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