Barclaycard will PAY you to transfer debts to balance transfer credit card – but is it any good?
BARCLAYCARD will give new credit card customers £20 cashback when they move their debts to one of their balance transfer card.
But whilst cashback is always good news, you may want to weigh up whether the deal is worth it before taking the plunge and switching.
Credit cards are a great help when it comes to paying for those big purchases - but if the balance has been on it for a while, the chances are you're racking up lots of interest which you may be struggling to pay back.
Transferring the debt onto a 0 per cent interest credit card instead means your monthly repayments will be going towards paying off the debt, rather than on interest rates.
"If you’re being charged interest on your credit card debts, a balance transfer could help you get a lower interest rate, or give you a break from being charged interest full stop, for a set period by moving what you owe to a new card," says Martin Lane, from .
The cashback offer on the Barclaycard is on the Platinum 25 month balance transfer card, which means you won't have to pay any fees for the first 25 months.
They reckon that the switch would save you an average of £1,335 over the 25 months - based on if you transferred £3,500 from a card with a 19.9 per cent interest rate, assuming you pay off £95 a month.
Often, you'll pay a one-off fee on the actual transfer of debt, but with this deal you won't pay anything.
You'll also pay 0 per cent interest on purchases for six months from the date you open your account as long as you make the balance transfer within the first 60 days.
But is the deal any good?
First up, it's important to know that lenders only have to give the advertised rate to 52 per cent of customers, so only those with the very best credit ratings are likely to be offered this deal.
The amount of credit you're offered will also be affected by this. So even though there's no fee to transfer any amount of debt - whether it's £1,000, £5,000 or £10,000 - you might not be offered enough credit to transfer the whole amount.
"The longest interest free cards give you more time to pay off what you owe without being charged interest but the upfront transfer fees may be slightly higher," says Martin.
How can you improve your credit score?
WHILE there is no credit blacklist which bans people from any sort of borrowing at all - if you have struggled in the past you may find lenders won't consider you.
If that's the case then there are steps which you take to help improve your rating:
- Don't make too many credit applications - Making lots of requests in a short period of time can be seen as a sign of financial distress - and each application will be recorded on your file. Use a "soft-search" eligibility calculator to show how likely you are to be accepted.
- Always pay your bills - Late payments are also recorded in your file so make sure you pay your monthly bills on time including utility and credit cards.
- Pay down your debt - Try and cut down your existing debt before applying for new credit as lenders may be reluctant to lend to you if you already a large amount of debt.
- Use a credit-builder credit card - These cards tend to have high interest rates compared to normal cards but if you can show you're a responsible spender with them, it can improve your chances in the eyes of lenders.
"While some cards don’t charge any fees for making a balance transfer but the 0 per cent period might be shorter as a result so try to get the balance right.
"Work out how long you need to pay off what you owe and try to find a card with a 0 per cent period that gives you enough time to repay with the lowest fee you can get."
So if you've got £1,000 worth of debt, you'll need to pay a minimum of £40 a month to write off your debt in the 25 months interest free.
But if you're in £5,000 worth of debt you'll need to pay back at least £200 a month and for £10,000 worth of debt you're looking at paying £400 a month.
If you've got higher debts then this deal isn't worth switching to simply for the cashback.
If you are accepted on this deal - you'll need to apply before May 14 - it's important to know that when you first make the transfer a two per cent fee will be applied although they will refund it.
Also, you'll only get the cashback if you transfer balances of £1,000 or more within 60 days of opening your account and it will be put into your account.
So if your debts are less, then this might not be the best deal for you.
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At the end of the 25 months, you'll be paying the APR on all balances - which is 19.9 per cent.
Martin says: "Before paying these charges, be sure to shop around and check whether you can transfer onto another 0 per cent deal as this could work out way cheaper."
Check if you're likely to be accepted before you apply
It's important to carry out a credit check on yourself before you apply for the Barclaycard deal.
If you're rejected for a credit card then your credit score could go down, which may affect whether lenders will accept you on any other deals.
A soft check won't affect your credit score and you can carry one out for free with Experian, Equifax or Call Credit.
You can also find out if you're eligible for the credit card with the checker,
You can potentially save thousands of pounds if you use a balance transfer card properly.
We've put together a round up of some of the best credit card deals out there.
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