0% deal for 18 months lures card hoppers

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The Independent Online

For rate tarts, it might sound like credit-card heaven.

Those who constantly switch their debt between 0 per cent credit cards to avoid paying interest may be interested in a new deal from Capital One, now being mailed to selected customers, offering a monster 18 months interest-free on balance transfers.

But it will be worth checking the small print on the company's Platinum Mastercard as prospective customers will qualify for the full 18-month 0 per cent offer only if they spend at least £100 on new purchases in the first three months.

Nick White from the price-comparison service uSwitch.com says that, as with most balance-transfer credit card deals, it isn't cost-effective to use the same card for new purchases because of the order of repayments.

Nearly all card providers now allocate your money to debts with the lowest level of interest first, leaving items charged at higher rates - such as new purchases and cash advances - to accrue interest.

With Capital One, the sums spent on new purchases during the three months will incur interest at 15.9 per cent for the remaining 15 months of the balance transfer.

Samantha Owens from financial analyst Moneyfacts says that while people opting for a 0 per cent transfer won't want to have to pay interest on new purchases, it may still be worth taking out the Capital One card - as long as they only spend that £100.

"This is the longest interest-free period on the market at the moment," she explains, "and you won't pay back a huge amount of interest on £100."

For those who do not want to do this, though, Ms Owens picks out credit cards from GE Money, Barclaycard, HSBC and Virgin. All these offer 12 months interest-free on balance transfers.

Moving your debts from one 0 per cent deal to another is no longer the easy ride it once was - and many in the industry think free balance transfers are becoming a "dying breed".

"Long gone are the days when rate tarts could jump from one credit card to another without incurring fees," says Michelle Slade at Moneyfacts.

Almost all providers now charge an upfront fee for their 0 per cent balance- transfer deal. And not only are those fees going up, but many are uncapped.

New findings from the price-comparison service MoneyExpert.com show that only one in eight credit cards cap their charges, typically at between £30 and £50, with the majority now imposing unlimited transfer fees - which can go as high as 3 per cent.

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