Deal of the week: longest fee-free 0% balance transfer credit card launches
What’s the deal exactly?
Sainsbury’s Bank has launched the longest fee-free balance transfer card on the market. Customers are able to transfer balances of £100 or more across to the bank and receive an interest-free period of 28 months.
The lender charges an initial 1.5% transfer fee but this is completely refunded within 60 days.
Representative APR is 18.9% and there are no annual fees to pay. Users also get 0% interest on purchases for three months.
Why should I care?
If you have credit card debt with another provider and are paying interest on your balance then transferring it can save you cash each month. This is the top deal on the market if you want to move your money but don’t want to pay any transfer fees.
What’s the catch?
Transfers must be made within three months of the account opening and remember that you will be charged a 1.5% transfer fee when you move your money across, but this will be refunded in full within 60 days.
You must also make a minimum payment each month of either 1% of your balance plus interest, 2.25% or £5 – whichever is greater. If you transfer any balance after the first three months you'll pay a 3% fee or £3 – whichever is greater.
What other options do I have?
Competition in the balance transfer credit card market remains fierce so there are plenty of options out there. You can get up to 43 months interest-free from other cards, but you will have to pay a transfer fee. You can use Moneywise’s credit card comparison tool to find a product that’s right for you.
Where can I find out more?
Full details of the product are available on the Sainsbury’s Bank website.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
Moving money from one account to another, whether switching bank accounts or more likely transferring the outstanding balance on your credit card to another card that charges a lower – or 0% – rate of interest. Some card providers may charge a transfer fee that can be a percentage of the balance transferred.
This is used to compare interest rates for borrowing. It is the total (or “gross”) interest you’ll pay over the life of a loan, including charges and fees. For credit cards where interest is charged at more frequent intervals, the APR includes a “compounding” effect (paying interest on interest). So for a credit card charging 2% interest a month (equating to 24% a year), the APR would actually be 26.82%.