Why now is the best time to apply for a direct debit credit card

It’s normal to have credit card debt once in a while. However, if you are paying too much interest on your debt, it may be time to consider a balance transfer credit card. You can transfer to one card with low interest or 0% interest.

This article explains why now is the perfect time to apply for a balance transfer credit card.

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How does a balance transfer credit card work?

Transferring your credit card balance to a balance transfer credit card provides a zero-interest introductory period lasting several months. This means that no interest will accrue on the loan during this period.

If you’re paying high interest on your current credit card debt, you could potentially save hundreds or even thousands of pounds in interest.

Check out our balance transfer calculator to find out how much money you can really save by transferring your debt to a balance transfer credit card.

The length of the 0% introductory period varies by card. But for most balance transfer cards, it’s usually enough time to clear your debt.

Why is now the best time to apply for a balance transfer card?

According to a recent report from Moneyfacts, balance transfer credit card transactions have recently become more attractive with longer periods of 0% interest.

Moneyfacts reports that the average interest-free period exceeded 600 days for the first time since 2008. Currently, the average interest-free period for balance transfers is he 602 days. This is up from his 577 days in December last year and 530 days this time.

Bank transfers are also cheaper. Balance transfer fees have fallen from an average of 2.23% a year ago to 1.95% now, according to Moneyfacts. This is the lowest level since 2006.

In addition, the number of direct debit transactions has also increased (after falling to record lows in 2020).

There are currently 68 direct debit transactions in the market with an interest-free introductory period. There are also 62 transactions that have an interest-free period at the time of purchase.

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What else should I know about applying for a direct debit credit card?

Be sure to compare the different options when it comes to applying for a balance transfer credit card. This increases your chances of finding the best deal for your needs. To help with this, the Motley Fool US headquarters has compiled a list of the highest rated balance transfer credit cards currently available in the UK.

Note that lenders are only required to provide headline rates to at least 51% of applicants. As such, when you apply for a balance transfer credit card, you are not guaranteed to receive the maximum advertised 0% term.

In some cases, it may be desirable to avoid the longest 0% period. Cards with longer 0% terms typically have higher balance transfer fees. So if you don’t need 33 months (the longest 0% period on the market) to pay off your balance, you can avoid higher fees by choosing a card with a shorter 0% period.

Finally, remember that applying for credit results in a hard credit search on your credit report. This can lower your credit score. A high number of rejected applications may make it unattractive to lenders.

Use The Motley Fool’s eligibility checker to check the likelihood that your direct debit credit card will be approved before you apply. This will not affect your credit score. More importantly, it could help minimize the number of rejected applications that could affect your ability to obtain credit in the future.