Cut your overdraft debt with 0% money transfer and balance transfer credit cards
No-one should have to pay really high interest on their overdrafts, so here's how to use a 0 per cent credit card to make sure you only pay what you owe
IF you're paying lots of interest on your overdraft, you're probably spending more than you need to.
By using a 0 per cent credit card, it's usually possible to clear the debt without paying any interest at all.
What are money transfer and balance transfer cards?
There are two main kinds of 0 per cent cards you can use; money transfer and balance transfer.
The main difference is that with a balance transfer you transfer the debt from one credit card to another.
With a money transfer, you shift cash from the card into a bank account that you can then use to repay other debts, such as an overdraft.
For a money transfer you'll usually pay a 4 per cent fee to transfer the cash, while a balance transfer will often only cost you between 1.5 per cent and 3 per cent.
But these fees are usually less than paying high overdraft fees.
The other benefits of these cards is that they usually offer an introductory period where you'll pay no interest on the transferred cash.
So if you use a 0 per cent card to pay down an overdraft debt, you know that all the money you're paying is actually clearing what you owe, not paying off interest.
Ideally, you want to clear the debt within the introductory period, as once this ends you will be swapped onto a higher rate.
But even if you can't pay it all off in that time, you're usually still better off switching and paying as much as you can while there's no interest added.
You may even be able to switch any leftover debt to a new 0 per cent deal.
What should I look out for when picking a money transfer card?
There are three main things you need to look at when choosing a card.
The first is how long the interest-only period will last; the longer it is, the more time you will have to pay off your debt interest-free.
It used to be the case that you could get deals that lasted for three or four years, but the longest money transfer deal at the moment has dropped to 32 months (just under three years).
The second factor to consider is how big the fee is. It will be charged as a percentage of your debt, so the lower the better.
Usually longer interest-free periods will have higher charges and vice versa, so think carefully about how much you can afford to repay each month and how much time you need.
The final thing to look at is what the interest rate will be when the introductory offer ends.
If you think you won't pay all your debts off in time, you want to make sure the interest you will pay is reasonable.
Not everyone is eligible for all cards, so if you have a poor credit rating you may struggle.
Use an to see what you're likely to be approved for, without it leaving a note on your credit file.
Even if you can't access a great 0 per cent deal, it's worth seeing if you can be approved for a lower interest card.
As long as you're paying less interest than your bank was charging, you've got a good deal.
The cheapest 0 per cent cards
The cheapest 0 per cent money transfer cards on the market at the moment are charging fees of between two and three per cent.
The lowest fee is for the where you pay a 2 per cent fee.
In return you pay 0 per cent on the money transfer for the first twelve months.
In second and third place are the , which charges 2 per cent, and the which charges 2.99 per cent.
The cheapest 0 per cent balance transfer cards all come with no transfer fees.
They are the , the no balance transfer fee credit card, and the Lloyds Bank .
The longest 0 per cent cards
The longest 0 per cent money transfer card is the which offers up to 28 months at 0 per cent, with a transfer fee of 2.99 per cent.
The next two longest deals also offer 28 months with 0 per cent interest, but with slightly higher transfer fees.
These are the , which has a 3.94 per cent transfer fee, and the which has a 4 per cent fee.
Two balance transfer cards will let you pay 0 per cent interest for a whopping 32 months. The charges a fee of 1.4 per cent, while the card charges 2 per cent.
The gives you 30 months of 0 per cent interest and charges 1.49 per cent.
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