Archive: MoneySavingExpert's Money Tips Email

Got debt on credit or store cards? Read this...
Today you can shift debt to THREE YEARS INTEREST-FREE. Yet with UK base rate rises expected, deals may be about to worsen. Sorting sooner is safer
PS: Not got any debt? Read this instead

Martin's analysis: "For most of the last year, apart from the usual competitive flick-flacks, top balance transfer deals - which let you cut the cost of existing debt - have barely budged. Yet that could soon change, with markets pricing in that the Bank of England may increase the UK base rate up to four times over the next 12 months, starting next month.

"When UK rates rise, the change to balance transfer and credit card deals in general can be subtle. 0% lengths may shorten, fees and standard APRs can climb, but most difficult to spot is when lenders keep headline deals the same but tighten their acceptance criteria. I don't know what'll happen, but if you're paying interest on credit card debt, my hunch is it's safest to sort sooner, especially as there are some strong deals this week. To help, the team and I have put this together..."

Jump to: Balance transfers for beginners | Top 0% balance transfers | Top deals if you're rejected | FAQs

A balance transfer is where you get a new credit card that pays off your existing credit or store cards for you, so you now owe it instead, but now it's interest-free. If you know what you're doing, jump to balance transfer best buys, otherwise... 

• How do you do it? Once you've been accepted, you get a credit limit - the max debt you can put on the card - and can usually balance-transfer up to 95% of that amount. The process is simple: just fill in the 'do a balance transfer' or similar section on the new card's app or website, or in some cases call up and request a 'balance transfer'. It'll sort it from there.
   
• I'm worried I'll be rejected? Our eligibility calculator shows your odds of getting each card (including cards for poorer credit scorers) so you can hone in and apply via it for the one most likely to accept you, minimising 'applications' on your credit file. Also, our free Credit Club (best via MSE App on Apple | Android) can help analyse why you're rejected too.
  
  
• How do I pick the right card for me? If the eligibility calc shows you've got a choice of cards, go for the lowest-fee card with a 0% term long enough to clear your debt. The longer the 0% period, the bigger the one-off fee (eg, 3% = £30 per £1,000 of debt shifted), so shorter 0% cards are cheaper. Unsure? Play safe & go long.
  
  
• Will it help? Massively. It means your repayments reduce the actual debt, rather than just cover the interest, getting you debt-free quicker (just don't borrow more). As Mr Ahmed emailed us a while ago... "We had to use our credit card due to rising costs on everything. We quickly racked up nearly £6,000 in a short time. Our anxiety worsened on the £90+/mth interest we were being charged and feeling we couldn't get out of a hole. Then my wife remembered about your eligibility checker. Within minutes we got approved for 0% balance transfer for 27 MONTHS." [Saving over £2,000 interest]

And getting the right card is just the start. Follow Martin's four balance transfer golden rules to protect yourself... 

1. Clear debt before the 0% ends. Pay it off or balance-transfer again before the 0% ends or you'll pay the higher rep APR.
2. Never miss the minimum monthly repayment. Or you can lose the 0% rate. Best to set up a Direct Debit.
3. Don't spend / withdraw cash on the card. It usually isn't at 0%, so will be expensive.
4. Try to avoid further borrowing. Think carefully before borrowing any more. Do a money makeover and a budget.

There are a number of cards which still accept those who've had past credit problems. Each card's published acceptance criteria tends to be quite limited, so by far the best thing to do is use our Balance Transfer Eligibility Calculator as it will show you first if you can get any standard deals - and if not, those cards you've the best chances of acceptance for, including these...

• Vanquis Up to 24mths 0% (3.9% fee). Yet 33.9% rep APR after. Our eligibility calc will tell you the 0% deal you'll get before you apply - it could be 24 or 20mths. Who can get it? Some with past CCJs or defaults, but you can't currently be bankrupt or have an active individual voluntary arrangement (IVA).
  
  
• Capital One Definite 22mths 0% (2.9% fee). Yet 26.9% rep APR after. This card is only available via our eligibility calc. Who can get it? Some with a history of past defaults, county court judgments (CCJs) and bankruptcies. 
  
  
• Fluid Up to 15mths 0% (3% fee). Yet 34.9% rep APR after. Our eligibility calc will tell you the 0% deal you'll get before you apply - it could be anywhere up to 15 months. Who can get it? It has a low min income requirement of £5,000/yr and accepts some with past CCJs, IVAs, or bankruptcies (if they're 3+yrs old). You need a year's UK address history & a UK bank account.

Poor credit-scorer cards WARNING! The APR (interest rate) after the 0% ends is often higher than you'll find on standard balance transfer deals (which are usually around 24.9%). So always compare that rate to the card(s) you're shifting debt from...

• Current card(s) APR is lower? ONLY shift debt you're certain you can clear within the 0% period.
• Current card(s) APR the same or higher? Shift as much as is allowed.

Plus always follow the Balance transfer golden rules.

We get many questions about how balance transfers work. These are the most common.... 

• Should I apply if my best eligibility score's only 20%? While 20% odds are low, it means two in 10 who apply will likely succeed - and it could be you. If you're rejected, barring a minor credit file application mark, you're no worse off. After all, cutting debt costs is what you try to protect your creditworthiness for (usually only trumped by a mortgage application), so go for it.
  
  
• Should I pay an equal amount on every card (spoiler... NO)? List all your debts in APR order from highest to lowest. Include your overdraft if you have one (as these days overdrafts are often the most expensive form of mainstream borrowing). Then, if possible, focus every penny of spare cash at trying to clear the debt with the highest interest rate, as it's growing quickest, and just pay the minimums on all the others. Once that's clear, shift focus to the next highest and so on.
  
  
• What if the credit limit they give me isn't enough? In most cases, you won't know your credit limit until after applying, though a few cards in the eligibility calc will show a guaranteed credit limit before applying.
  
  If you find the limit given is too low, don't just ditch the card, any debt at 0% is better than debt at a higher APR. So shift as much of your highest APR debt as you can to the new card. Then once done, go back to the eligibility calc to see your chances of acceptance for other providers' cards to move the rest (don't apply for more than one at once, as each application can hit your chances of getting the next).
  
  
• What if the eligibility calculator says I've 'no chance' for all cards? That can happen, especially for those on lower incomes or with a poor credit history (see how to improve it in MSE's Credit Club). So check if your credit limits on all existing cards aren't full in case you can shift debt from one card to another if it's cheaper. For example, if one credit card charges 18% and has half the credit limit left, and the other card is at 30%, ask the cheaper card's firm if you can shift debt from the more expensive one to it, saving you cash. Even better, some cards also have 'existing-customer balance transfer offers', eg 12mths at 0%. See the credit card shuffle for more.
  
  Yet equally failing to get any cheaper credit isn't a great sign. If you are generally struggling with debt do read on... 
  
  
• I'm really struggling with all my debts, what should I do? The tips above are for those who can afford to meet their credit card payments. If you can't, you'll likely need a different tack. Here's Martin's snap test...
  
  1. Do you struggle to meet minimum monthly payments or pay all bills?
  2. Is your total debt (not mortgage/student loan) over a year's salary?
  3. Do you have sleepless nights or depression/anxiety over debt?
  
  If you answered yes to any of these, you need a stronger intervention, so get free, one-to-one debt-counselling help from Citizens Advice, StepChange, or National Debtline. They have powers to give you breathing space on your debt, or can put you in a repayment plan or similar. While this may impact your ability to access credit, it's usually worth it to get you out of the debt hole. If you need emotional support too, try CAP. Often the feedback we get is 'thanks, spoke to them & finally slept last night.'
  
  If worried, do read inspiring stories in the Debt-free wannabe forum, plus see Mental Health & Debt & Debt crisis for more.