Experian has launched a new feature that will end the nerve-wracking gamble borrowers take when they apply for a balance transfer credit card without knowing whether they’ll be accepted.
The Experian ‘Credit Limits’ service will allow you to see if you will get the credit limit you need before applying for a 0% balance transfer credit card with Vanquis or Capital One.
A 0% balance transfer deal allows you to shift debt from other cards, without paying interest for a set period. But it can be hard getting offered a big enough credit limit to absorb the debt you want to move.
Here, Which? explains why your credit limit is important, how Experian’s new tool could benefit you, the drawbacks to watch out for and the best balance transfer deals to help you get debt-free.
Why your 0% balance transfer credit card limit is important
The credit limit you get on a 0% balance transfer credit card is crucial as it determines how much you will be able to move over from your other cards.
Normally when you shop around for a credit card, you won’t be told how big your credit limit will be until you’ve applied for the deal, which is a problem if you need a specific amount.
For example, if you needed to transfer more than £4,500-worth of debt, you’d have a problem if the card provider you applied to only ended up offering you a £2,000 limit.
You might decide to take the same gamble again with another provider, which isn’t a great thing to do as multiple applications in a short amount of time can lower your credit score.
This is because every time you apply for credit it leaves a mark on your credit report, regardless of whether you go on to use the card.
A lower credit score could impact your ability to take out future credit on things like a mobile phone, loan or mortgage.
- Find out more: how to check your credit report for free
How does Experian’s Credit Limits tool work?
Experian’s credit card comparison service will now ask you what balance you need to transfer when you are applying for a 0% balance transfer deal.
This, along with other criteria you enter, will allow Experian to perform a ‘soft search’ to tell you if the credit limit will be met.
Experian will display results and highlight any card that guarantees to offer you the limit you need. It will also include cards that will offer part of the amount you need.
However, it can only check two providers at present: Vanquis and Capital One. Other providers will require a hard credit check before you can find out what limit they’d offer you.
The service will also show the actual rate you’ll get and the chances of being approved for credit before applying.
- Find out more: 0% balance transfer credit cards explained
Which deals can you see guaranteed credit limits for?
Vanquis and Capital One are the only providers currently signed up to Experian’s Credit Limits service out of a market of 24 providers offering 0% balance transfer deals.
These brands are known for offering credit builder cards, which can help boost your credit rating but tend to come with higher levels of interest compared with other deals.
Experian says it hopes more lenders will join the service, but for now, it’s worth keeping in mind that you should explore deals with other providers to make sure you find a card with the right 0% period and balance transfer fee for your needs.
- Find out more: best and worst credit card providers
How much could you save with a 0% balance transfer card?
Nearly a fifth of credit card holders are paying interest on their current card,, according to a poll of 2,000 people in February 2019 by Experian.
Borrowers paying interest on high credit card balances could potentially save money by transferring to a 0% balance transfer card.
These deals allow you to move credit card debts from other cards and freeze the interest for a set period, usually for a one-off fee of around 3%.
A credit card with an outstanding balance of £2,000 charging 18.9% APR that you put £80 a month towards would take you 32 months to clear and cost £503 in interest.
But by moving to a balance transfer deal with a 0% period of 25 months and no balance transfer fee you could freeze interest and clear it with repayments of £80 a month at no extra cost.
- Find out more: credit card interest explained
The best 0% balance transfer credit card deals
Below, we’ve set out the top 0% balance transfer credit card deals that come with the longest 0% period.
You can compare balance transfer deals using Which? Money Compare based on the length of the deal, size of the balance transfer fee and using our exclusive Which? Customer Score.
|Credit card||0% balance transfer period||0% balance transfer fee||Fee for moving £2,000||Representative APR|
|Sainsbury’s Bank Balance Transfer Credit Card||29 months||3%||£60||19.9%|
|Virgin Money 29-Month Balance Transfer Credit Card||29 months||3%||£60||21.9%|
|Tesco Bank Clubcard Credit Card for Balance and Money Transfers||28 months||2.98%||£59.60||19.9%|
Source: Which? Money Compare. 5 December 2019.
- Find out more: 44 tips on paying off your debt
Please note that the information in this article is for information purposes only and does not constitute advice. Please refer to the particular terms and conditions of a provider before committing to any financial products.
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? Money Compare is a trading name of Which? Financial Services Limited.