Balance transfer card or Interest free card

tiwe20

Hi, was wondering if someone could help.

Is there a difference between a Balance transfer card and interest free card.

My interest free card is about to expire and wasn't sure if I should pay it off or apply for a balance transfer card. My question is if I switch to a balance transfer card, can I use it to purchase items in the future for 0% or is the 0% just for the money I have transferred from my last card.

I hope this makes sense, I'm not sure why my brain makes things so complicated.

flaneurs_lobster

Think you mean 0% interest spending card?

There's an article on the main MSE site with a brief description of each card type

https://www.moneysavingexpert.com/credit-cards/#best

Briefly, you can usually make purchases using a balance transfer card (if there is sufficient credit available under the limit), but it's really not recommended. The purchases will not be interest free, and you will need to settle such purchases in full that billing month otherwise they attract interest, in addition to your minimum payment for the balance transferred.

Makes for messy budgeting and possibly very expensive borrowing..

Brie

A 0% BT card is just that. 0% on a BT that you do and that's for a set period of time. Sometimes there's also a window in which you can do the BT. So "first 3 months" or "until 30 April".

The standard line too is that you never use a card for purchases if you have a 0%BT on it. That's because you are normally paying just a set amount or minimum required to maximise the advantage of the BT offer. This means you are not clearing the balance in full each month and therefore any purchases made get charged interest from the date of purchase which negates the advantage of the 0% offer.

I'd suggest you apply for a 0% BT card, switch what you can on to that and then use your current card for your daily purchases and pay off in full each month.

And stating the obvious - always have at least the minimum DD set up on any card to ensure you don't miss a payment. With my cards that I use for purchases I have the DD set up to clear in full each month so never have interest to pay. With cards with a 0% BT I set the DD a bit above the minimum so I know what to expect each month. So if the minimum is £95 I set the DD to pay £100. When the minimum required gets down to £85 I might reset the DD to £90 and so on.

CliveOfIndia

In general you shouldn't make purchases on a BT card. Any purchases are subject to the usual rule whereby you'll pay interest unless you clear the whole statement balance - which would include the BT element as well.

There are a couple of cards which separate out the BT and purchases (I think Barclaycard is one?), in which case you can use them to make purchases, and not pay any interest as long as you clear the purchases each month. But these are very much in the minority - make sure you read the T&Cs of any card very carefully and make sure you understand them.

"My interest free card is about to expire and wasn't sure if I should pay it off or apply for a balance transfer card".

If you're in a position to be able to pay off the existing card, that might be a good option. It means you won't have to pay a BT fee (some cards will offer fee-free BTs, but most will charge a fee), so you'll save money overall. You could then look to get a new card for everyday spending - either one which offers 0% interest on spending if that's what you want, or else one that offers rewards of some kind, assuming you'll be able to clear the full balance every month.

tiwe20

Many thanks for all your reply's, it's very much appreciated and informative.

I'm probably going to pay the card off and start again with a new card, something like the 24mth, 0% TSB card.

Thanks again