Credit card interest can sometimes exceed 30%. So if you’re running a hefty balance on your plastic, having to pay such a high interest rate can cost you dearly.
But did you know that you can actually stop having to pay credit card interest by shifting your debt to specialist type of credit card? Plus, right now you can even bag £25 cashback.
But with interest rates heading upwards, you may have to act quick, as the top deals may soon be cut back. Here’s what you need to know.
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How can you stop paying credit card interest with a balance transfer?
If you have a balance on a credit card and you’re paying interest, you should seriously consider a 0% balance transfer credit card. That’s because these cards allow you to shift debt to them from other credit cards.
In other words, once you make a balance transfer, you won’t owe anything on your old card. Instead, you’ll owe your new balance transfer card, but at 0%.
So while you’d still need to repay your balance, you won’t have to pay any interest for the duration of the 0% period. This means if you manage to clear your balance before your new 0% period ends, you can get rid of your debt interest-free.
The balance transfer credit card market has been very competitive over the past few years, and this is still the case (for now). Currently, two providers offer cards that will pay you cashback for switching your debt to 0%!
How can you get PAID to shift credit card debt?
Right now, two balance transfer cards are paying cashback. Let’s take a closer look at them.
HSBC: 31 months at 0%, plus £25 cashback
This HSBC balance transfer credit card offers 31 months at 0%. Plus, if you shift at least £100 to it within 60 days, then you can get £25 cashback on top. Anything you transfer will incur a 2.7% fee, but if you’re shifting £975 or less, the cashback will more than cover the fee.
Ensure you clear the card in full before the 0% period ends to avoid the 21.9% rep APR interest.
Barclaycard: up to 27 months at 0%, plus £20 (until Tuesday)
This Barclaycard offers up to 27 months at 0%, with a 1.28% fee applied to anything you transfer. As it’s an ‘up to’ card, those with poorer credit scores may be offered just 13 months at 0%.
The card also pays £20 cashback if you shift at least £2,500 within 60 days. However, you’ll have to be quick as the offer ends on Tuesday 8 February.
As with the HSBC card above, the rep APR is 21.9% on this card. To avoid paying this, ensure your balance is cleared before the interest-free period ends.
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What other balance transfer deals are available?
While only two cards will pay you to shift your debt to them, there are other cards available that offer even longer 0% periods.
Currently, the longest 0% period available is from MBNA. It offers up to 33 interest-free months. A 2.69% or 3.49% transfer fee applies (depending on your credit score) to anything you transfer, while the rep APR is 21.9%.
In terms of fee-free balance transfer cards, the longest available is from Sainsbury’s Bank, which offers up to 21 months at 0%. The rep APR is 20.9%.
For more options, see The Motley Fool’s top-rated balance transfer credit cards.
Balance transfer need-to-knows
If you do apply for one of these cards, keep in mind the 10 dos and don’ts of using a balance transfer credit card.
It’s also worth remembering that each credit card application you make is recorded on your credit file. To reduce the chances of being rejected for a specific card, use our credit card eligibility checker.
How long will the top balance transfer deals last?
With interest rates rising, there’s a chance that the top balance transfer deals won’t last. That’s because the current ‘cheap credit’ environment we live in may soon begin to change as the Bank of England moves to curb rising inflation.
This means that cards offering 0% periods exceeding two years, or cashback to shift debt to them, may soon become a thing of the past. In other words, if you have debt to shift, it’s probably better to act sooner rather than later.
