Yahoo Finance 
Pay off your debts for less
The competition between credit card companies has never been fiercer, particularly when it comes to 0% balance transfer credit cards. That's great news for anyone who has credit card debts or an overdraft and a good credit history.
For example, Barclaycard has just increased its longest interest-free introductory period to 27 months, in response to NatWest and Royal Bank of Scotland (RBS) increasing their 0% periods to 26 months.
Let's take a look at the options for paying off these type of debts.
If you have credit card debts
There are currently eight credit cards offering a 0% introductory period of two years or more.
Credit card | 0% balance transfer period | Balance transfer fee | Cost of transferring £2,500 |
27 months | 3.5% | £87.50 | |
26 months | 2.65% | £66.25 | |
26 months | 2.65% | £66.25 | |
25 months | 2.4% | £60 | |
25 months | 2.5% | £62.50 | |
25 months | 2.9% | £72.50 | |
MBNA Platinum | 24 months | 2.85% | £71.25 |
Fluid 24-Month Balance Transfer Visa | 24 months | 2.89% | £72.25 |
As it stands the Barclaycard 27-Month Platinum Visa is the most expensive longer-lasting deal, charging 3.5%, which is 0.85% (or £21.25 on a debt of £2,500) more than NatWest and RBS. However, you get the longest period currently available (an all-time record) to pay off your debts.
However, the Barclaycard 25-Month Platinum Visa charges a fee of 2.4%, which would save you £27.50 if you're transferring £2,500 of debt. We should point out though that you can't transfer balances from other Barclaycards.
[Could you avoid interest on your debt? Take a look at the top 0% balance transfer credit cards]
The cheapest balance transfer fee
If you’re chasing the cheapest balance transfer card rather than the longest lasting, the Halifax All in One credit card and the Lloyds TBS Platinum MasterCard charge 1% balance transfer fees, meaning you would only pay £25 to move £2,500 worth of debt.
It's important you make sure you can repay your debts during the 0% period or you'll end up paying interest. If you take out the Halifax or Lloyds cards you will be charged 17.9% APR after 15 months on any debt you have left.
Once your deal ends you could try transferring whatever you have left onto another balance transfer credit card, but there is no guarantee you will be successful.
[Take a look at the credit cards with the lowest balance transfer fees]
If you have an overdraft
One way to get rid of your overdraft is to transfer money from your credit card to your current account. Many credit cards allow you to do this. Once you’ve transferred the money, you can use it to pay off your overdraft.
Unfortunately, credit card companies usually charge very high rates of interest on this sort of cash advance, higher than you would pay with most overdrafts.
However, there are a few cards that allow you to transfer money from your card at 0% interest. In other words, these cards allow you to do a 0% money transfer.
This is very similar to a 0% balance transfer. There are only two differences:
1. You’re transferring money from a card to a bank account, instead of transferring a debt from a card to another card.
2. The fee is often higher for a money transfer than for a balance transfer. Money transfer fees are usually around 4% whereas balance transfer fees are typically between 1.5 and 3%.
Credit card | 0% money transfer period | Money transfer fee | Cost of transferring £2,500 |
Fluid 24-Month Visa | 24 months | 4% | £100 |
MBNA Platinum | 24 months | 4% | £100 |
18 months | 4% | £100 | |
15 months | 4% | £100 |
As you can see, all of the cards charge the same fee, so it's a question of how long you need to pay off your debts. Don't underestimate or you'll end up paying interest.
Personal loans
If you have larger debts, for example over £7,500, you could consolidate them into one personal loan. Right now, loan rates from mainstream lenders have fallen to as low as 5%.
However, if you want to borrow between £7,500 and £15,000, can repay it within one to three years and have a good credit rating, you could borrow at 4.9% from peer-to-peer website Zopa. This site matches ordinary people lending money with ordinary people who want to borrow it – there are no banks involved. But you only have until Wednesday (22nd) to apply for this low rate.
The top loan rate for borrowing over £7,500 comes from Derbyshire Building Society at 5%, followed by Clydesdale, Sainsbury's and Tesco at 5.1%.
Consolidating your debts into one loan repayment can make sense, but only if you can afford your monthly repayments and you don't go out and start spending again.
