0% Interest For 12 Months Is Back!
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Hands up if you are currently paying interest on some form of non-mortgage debt? Expensive loans, store cards and credit cards are the usual culprits and many of us are paying huge amounts of interest on our balances. In fact, paying interest seemed to be a fact of life until the advent of a wonderful thing the 0% balance transfer credit card!
By taking out one of these cards and moving the balance of other cards or loans to it you can avoid paying interest for as long as the offer lasts. And not only does this mean you are effectively borrowing for free, but it gives you some time to really hammer away at that debt. Many people aim to pay the balance of their 0% card off completely, before the interest free period expires.
These 0% cards are therefore a pretty good deal for us, the consumer. Unfortunately, they aren't as lucrative for the lenders, which could explain why those 12 and 18 month interest free deals on the market a year ago have now been reduced to just six or nine months.
But that may all be about to change as Halifax, one of the biggest lenders is offering a 0% deal for balance transfers to its One card for 12 months. Not only that, but the 0% deal is for purchases too, meaning that as long as your credit limit can handle it, you can put new spending on your card and pay no interest there, too fantastic! And the APR will revert to 12.9% when the deal has expired.
Now there are some catches. Like Egg, the Halifax One card has introduced a balance transfer fee - 2% of your balance (minimum £2, maximum £50). The 12 months also begin from the date of the card issue, not from the date of balance transfer so a slow transfer could eat into your precious interest free period. It has also ditched its 0.25% cashback offer. However, it does offer cover against online fraud when purchasing on the internet.
As a general rule, larger balances will effectively get a better deal if balance transfer fees are involved; it would cost the same to transfer a balance of £25,000 as it would for £2,500 (£50) in this case, for example. If you have a smaller balance, a nine month, 0% deal with no transfer fee (such as that offered by the Intelligent Finance card) could be better for you. However, a year long deal would certainly work out very well for reluctant 'rate tarts' you may even have paid off your balance in that time. Spend some time doing the sums for your situation before leaping into any deal.
Hopefully the tide is turning for 0% deals and more 12 month deals will follow they are certainly good news for us, the consumers. But we should remember that 0% cards should be used as a useful tool (not as a license to spend more) and aim to pay back that debt as soon as possible.
You can apply for 0% cards such as the Egg Card in our Credit Card Centre.
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