Virgin Money launches 0% balance transfer card - is it the best on the market?
- The new card has a 29-month interest-free period - if you qualify
Virgin Money has upped the ante in the balance transfer stakes with a 0 per cent interest on transfers for 29 months.
Balance transfer cards can be a useful tool in cutting how much you pay in credit card interest, as well as helping clear debt.
If you've got a credit card balance that you're not clearing in full it means you're paying interest each month, so switching to an interest-free card will save you money as you will pay low or no interest for a period.
New best buy: Virgin Money has launched a balance transfer card worth serious consideration
Everyone accepted for the card gets the full deal, so if Virgin Money's eligibility checker shows you have a high chance of being accepted, you will get the advertised 0 per cent period, rather than a shorter version.
This is Money looks at how it stacks up to other balance transfer cards.
How do balance transfer cards work?
Balance transfer cards let you move balances from one or more credit cards to another card, often at a lower interest rate.
This can help you clear your debt faster, as you don't have to pay off interest, and help you manage payments more easily as these are all on one card.
Some balance transfer cards offer initial an 0 per cent interest period. Once this ends, the card's standard interest rate will apply to your outstanding balance.
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In the case of the Virgin Money balance transfer card, the interest-free period lasts for 29 months.
The card carries a one-off balance transfer fee of 3.45 per cent of the balance transferred.
This means that someone transferring £5,000 would pay a fee of £172.50, while someone with £10,000 to transfer would pay £345.
After the 29-month 0 per cent interest period, the card's interest is 24.9 per cent AER.
Someone with £1,000 left to pay off when this period starts, paying off £100 a month, would take 10 months to clear it and pay £118 in interest.
Likewise, someone with £3,000 paying off £100 a month would take four years and three months to clear their balance, and pay £1,444 in interest.
Is this now the best balance transfer card?
The Virgin Money card works out as the cheapest balance transfer card when it comes to fees and the interest-free period - but only just.
One other balance transfer card has a 29 month interest-free period. That is offered by HSBC, but it has a slightly higher fee of 3.49 per cent for the balance transfer.
That means someone moving £5,000 onto this card would pay £174.50 in fees, £2 more than the Virgin Money card.
Tesco Bank's balance card offers up to 27 months interest free, with a slightly lower one-off balance transfer fee of 2.95 per cent.
In other words, someone transferring £5,000 onto this card would pay £147.50 in fees, £29 less than the Virgin Money card, but would have two fewer months of the interest-free period.
NatWest's balance card comes with 13 months interest free. There is no fee for those who are able to pay off their debt within 13 months.
Andrew Hagger, founder of personal finance website MoneyComms, warns that the best 0 per cent cards require a good credit rating.
Getting accepted for 0 per cent credit cards
Hagger said: 'For 0 per cent balance transfers the Virgin Money card is the best card - it is offering the joint longest (29 months) interest-free period subject to a one off balance transfer fee of 3.45 per cent of the balance transferred.
'The best buy 0 per cent cards are not always the easiest to be accepted for - you'll need a pretty good credit rating to bag one of these.
'You still have to make a minimum repayment each month, but as long as you do that there is no interest to pay as long as you manage to clear your balance within the 29 month promotional term.'
Always make sure you pay your credit card bill on time every month if you take out a balance transfer card.
Hagger added: 'if you are late paying or miss the payment altogether the card provider is likely to terminate your deal and you'll suddenly be paying around 25 per cent interest on your balance.'
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