Best balance transfer cards: TSB has longest term of 29 months

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Warning to those in debt as 0% balance transfer credit card terms shrink: TSB now has longest deal at 29 months but others come without a fee

  • The longest 0% period for balance transfer credit cards is now 29 months 
  • Longest interest-free period was up to 39 months in November 2017 
  • TSB credit card tops the leaderboard but may not necessarily be the best

By Ed Magnus For Thisismoney.co.uk

Published: | Updated:

Credit card providers are stealthily slicing 0 per cent balance transfer windows leaving borrowers facing shorter time periods in which to repay debts.

A balance transfer credit card allows customers to pay off debts by transferring the entire debt over to the new card, often with the promise of 0 per cent interest for a fixed period of time.

But the duration of 0 per cent balance transfer credit cards has reduced in recent years, according to data by Moneyfacts, which advises that for those considering such a card, it may be a wise to apply for one sooner rather than later.

The gap between the longest-term and top fee-free option is now 11 months, with TSB charging 2.95 per cent fee to transfer but giving 29 months to pay off the debt, while the longest term without a fee is now 18 months. 

The TSB Platinum Balance Transfer card will help customers manage their finances by allowing people to consolidate debts and save money on existing card balances.

Three years ago, borrowers could secure credit cards allowing them an interest-free period of up to 39 months in which to pay off their debt. 

Today TSB’s Platinum Balance Transfer credit card offers consumers a 29-month interest-free period, now the longest 0 per cent interest offer of any balance transfer card but still a month less than the same card offered just weeks ago. 

Rachel Springall, finance expert at Moneyfacts, said: ‘It is vital that consumers act quickly to take advantage of the top deals as we could see more cuts in the weeks to come.’  

The TSB credit card offers 0 per cent interest for the first three months on any purchases, but a yearly 19.95 per cent variable charge will apply thereafter.

Customers should be aware that the TSB card applies an upfront fee of 2.95 per cent for all transfers made within the 90-day opening period.

This means that when transferring a debt of £3,000, a charge of £88.50 will apply. 

After TSB, the next longest interest free period is offered by M&S via its Transfer Plus credit card, giving customers 28 months to repay, if accepted, with an upfront transfer fee of 2.85 per cent.

The M&S credit card also offers 0 per cent interest for the first six months on spending compared to the three-month period being offered by TSB.

Credit card best buys

An alternative for potential customers is a fee-free balance transfer card which, although offering less generous timescales in which to repay the debt, does not charge an upfront fee.

The best fee-free balance transfer credit cards on the market today are offered by Santander and Sainsbury’s Bank, both of which have a 0 per cent balance transfer term of 18 months.

This means for someone transferring a debt of £3,000, they would need to pay £167 per month in order to pay it off within the 18-month period.

Springall said customers would save money by opting for the shorter fee-free option, adding: ‘The most cost-effective deal depends on how long consumers feel comfortable about needing to pay back their debts.’

Mark Gordon, director of money at Compare the Market, encourages consumers to use price comparison sites to help decide what’s best for them.

Gordon said: ‘It’s always worth shopping around to compare prices and find the best value deals online.

‘Soft eligibility checks enable prospective customers to see what deals you could be accepted for without damaging your credit score.’  

With Equifax reporting last week that the number of new ‘sub-prime’ borrowers taking out credit cards increased by 143 per cent between August and September, there are signs that more consumers are facing financial difficulties amidst the pandemic.

Springall advised consumers considering a balance transfer credit card, to first review their credit report to ensure there are no abnormalities or missed payments that might count against their card application.

She added: ‘In the months to come, consumers may decide to turn to balance transfer cards to give them a bit of breathing space with their repayments in the knowledge that their debt is not bearing interest.

‘However, it is vital consumers make every effort to set a key date to clear their debts by, or they may have to switch again, and potentially pay a fee to do so.’

The small print: Read this before applying

Being approved for a balance transfer card is by no means guaranteed.

In theory, those with the best credit ratings are the most likely to be approved for a card as they will have a history of paying off debt on time. 

It is more probable that those with poor credit ratings will be rejected or be given less attractive terms such as a higher interest rate or shorter interest-free period.

Those who are refused should bear in mind that applying for a number of other balance transfer cards in a short space of time will worsen their credit rating.

Many card providers will not allow you to transfer balances from another of their own products, so you should identify the best deal for you outside of your existing provider before making an application.

Some providers may only accept your application if you already hold a current account with them.

There are other restrictions such as having a minimum level of income – generally between £10,000 and £20,000.

To take advantage of introductory 0 per cent offers, you may have to transfer your balance within a specified time frame. 

Most credit card providers increase handling fees after the first 60 or 90 days.

THIS IS MONEY’S FIVE OF THE BEST CREDIT CARDS

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