Virgin Money launches 0% balance transfer card – is it the best on the market?

Virgin Money has upped the ante on balance transfers with 0 per cent interest on transfers for 29 months.

Balance transfer cards can be a useful tool for reducing the amount you pay in credit card interest, as well as helping you pay off your debt.

If you have a credit card balance that you’re not paying off in full, it means you’re paying interest each month, so switching to an interest-free card will save you money as you’ll pay little or no interest over a period of time. .

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’ll get the advertised 0 per cent period, rather than a shorter version .

This is Money looks at how it compares to other balance transfer cards.

How do balance transfer cards work?

Balance transfer cards allow you to transfer balances from one or more credit cards to another card, often at a lower interest rate.

This can help you pay off your debt faster, since you don’t have to pay interest, and will help you manage payments more easily, since they are all on one card.

Some balance transfer cards offer a 0 percent introductory interest period. Once this ends, the card’s standard interest rate will be applied to your outstanding balance.

For the Virgin Money balance transfer card, the interest-free period lasts 29 months.

The card carries a one-time balance transfer fee of 3.45 percent of the transferred balance.

This means 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 percent interest period, the card’s interest is 24.9 percent APR.

Someone who has £1,000 left to pay when this period begins, paying £100 a month, would take 10 months to pay off and would pay £118 in interest.

Similarly, someone with £3,000 paying £100 a month would take four years and three months to pay off their balance and would pay £1,444 in interest.

Is this now the best balance transfer card?

The Virgin Money card turns out to be the cheapest balance transfer card when it comes to fees and interest-free period, but just barely.

Another balance transfer card has a 29-month interest-free period. This is offered by HSBC, but has a slightly higher fee of 3.49 per cent for the balance transfer.

That means someone transferring £5,000 to this card would pay £174.50 in fees, £2 more than the Virgin Money card.

The Tesco Bank 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 to this card would pay £147.50 in fees, £29 less than the Virgin Money card, but would have two months less of the interest-free period.

The NatWest Balance Card comes with 13 months interest-free. There is no fee for those who can pay off their debt within 13 months.

Andrew Hagger, founder of the personal finance website MoneyComms, warns that the best 0 percent cards require a good credit score.

Be accepted for credit cards at 0 percent

Hagger said: ‘For 0 per cent balance transfers, the Virgin Money card is the best card – it offers the longest interest-free period (29 months) subject to a one-off balance transfer fee of 3.45 per cent of the balance transferred.

‘The best 0 per cent purchase cards aren’t always the easiest to accept – you’ll need a pretty good credit score to get one of these.

“You still have to make a minimum payment each month, but as long as you do, you won’t have to pay interest, as long as you manage to pay off your balance within the 29-month promotional period.”

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’re late or don’t pay in full, the card provider will likely cancel your deal and suddenly you’ll be paying around 25 per cent interest on your balance.”