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.
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.
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.
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.
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 to make sure you find a card with the right 0% period and balance transfer fee for your needs.
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.
Below, we've set out the top 0% balance transfer credit card deals that come with the longest 0% period.
|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.
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.