If you are suffering from a festive financial hangover, a 0per cent balance transfer credit card could be the cure.

Borrowers can save hundreds of pounds in interest with the cards, as some of the top deals charge 0per cent for almost three years.

Mark Huggins, Director of AA Financial Services, says: "A balance transfer could be a good option to consider for those that want to consolidate Christmas spending along with other expenses. With careful budgeting it's possible that a 0per cent balance transfer may be cheaper than paying back existing debts."

Here's how it works. If you have built up a debt on a credit card that charges a high rate of interest, you simply switch the balance to a 0per cent deal and pay no interest on your debt for as long as 35 months. It's a bit like an interest-free loan and can be a smart way to manage your debts.

Let's say you owe £3000 on a card that charges a standard rate of 18.9per cent. If it took 35 months to clear the debt, you would pay total interest of about £800.

But transfer the balance to the Barclaycard Platinum card that charges zero interest for 35 months and you would pay no interest whatsoever if you cleared the debt within the term. There is, however, a balance transfer fee of 2.49per cent, or £74.70 on a debt of £3000.

The average balance transfer to a new card is £1991, according to research by Confused.com. But one in ten has transferred more than £5000.

The golden rule with balance transfer cards is to clear the debt before the interest-free period expires. If you still owe money after the 0per cent term, you will start to rack up interest at a higher standard rate, typically 18.9per cent. The easiest way to stick to the payment deadline is to set up a direct debit.

Most 0per cent cards charge a fee of about 3per cent of the transferred balance. If you want a card that charges a lower fee, you usually have to settle for a shorter balance transfer term. For example, there is no balance transfer fee on the Santander credit card, but the 0per cent term is only 15 months.

The shorter term makes a big difference to the monthly payments. It would cost about £86 a month to pay back £3000 over 35 months. With a 0per cent term of just 15 months, the monthly cost would rise to £200.

Halifax has recently revamped its balance transfer cards to give customers a choice. It now offers a card with 0per cent on balance transfers for 34 months with a transfer fee of 2.8per cent. Or you can pick a card with no fee that charges 0per cent on balance transfers for 13 months.

You can usually switch a balance from any other credit card or cards, including store cards, though you cannot normally transfer a debt that you have built up on card issued by the same banking group. For example, if you had run up debts on a Bank of Scotland card, you would not be able to switch the balance to a Halifax deal.

Some 0per cent balance transfer cards charge 0per cent on purchases too, but rarely for such a lengthy period. Barclaycard and Halifax, for example, both charge zero interest on purchases for six months. You therefore have to use your card with care. If you make purchases on the card, you have to remember that the interest-free period is shorter and adjust your payment schedule accordingly. You might be better off with two separate cards - one for balance transfers and one for purchases. It not only makes it easier to manage your borrowings but you will almost certainly get a better deal on purchases if you take out a separate card.

Remember that credit card firms are picky about their borrowers and save the best deals for consumers with a clear credit history. So, if you have struggled with debts in the past, your application could be refused. Alternatively, you might be offered a different deal with a different interest rate and term.

For a flexible way to clear debts, MBNA's Platinum Credit Card is a 0per cent balance transfer card, with a difference. It allows you to transfer funds from the card to your current account and pay no interest for 24 months. There is a transfer fee of 2.2per cent. The AA has a similar offer, though for 28 months, and with a fee of 4per cent. Let's say you run up an overdraft of £1000 for 15 days of each month. The annual cost could be as high as £180 with some of the high-street banks. But if you took out an MBNA card and transferred £1000 to your current account, you would pay only the transfer fee of 2.2per cent, or £22. If you then cleared the card debt within two years, you would pay no interest, potentially saving more than £150.

Andrew Hagger of Moneycomms.co.uk says: "If your credit rating is in good order then this card gives you the chance to wipe out that nagging and expensive bank overdraft once and for all - if you're financially disciplined."