Barclaycard goes from zero to credit hero

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The Independent Online

After pressure from consumer groups and the media, Barclaycard announced last week that it is scrapping its confusing "0 per cent for ever" deal.

After pressure from consumer groups and the media, Barclaycard announced last week that it is scrapping its confusing "0 per cent for ever" deal.

This promised 0 per cent on transfers for the life of the balance - but only if customers spent £50 on the card each month and didn't repay the bill in full. New spending was charged at a typical rate of 14.9 per cent, and could not be paid off until the balance transfer had been cleared.

The Office of Fair Trading forced Barclaycard to withdraw advertising for the deal last year. But from June, Barclaycard is making amends by launching a much more straightforward and competitive offer. Indeed, it will send Barclaycard to the top of the "best buy" tables - not somewhere it is generally seen. New customers will get a 12-month interest-free period on balance transfers and new purchases, with no catches.

The current market leaders, Halifax and Mint, offer 0 per cent on balance transfers and new purchases for shorter time spans - nine and eight months respectively.

"The credit card market is already competitive but this is going to make it even more so," says Stuart Glendinning, marketing director at moneysupermarket.com. "There are still millions of customers with credit cards charging high rates and offering few benefits. This is another call to action: people should overcome their inertia and get another card."

Getting a 0 per cent card doesn't mean you can afford to rest on your laurels, though. Where Barclaycard customers will lose out, compared with those at Halifax and Mint, is if they have an outstanding balance at the end of the first 12 months. After their introductory periods, Halifax and Mint customers move to a typical standard rate of 9.9 and 10.9 per cent respectively; but Barclaycard customers will pay around 13.9 per cent.

Clever customers won't be affected, however. They will shop around for another 0 per cent card a couple of months before the end of their introductory deal.

The only real fly in the ointment with Barclaycard's new offer is that existing customers don't qualify for the 0 per cent introductory period, although this is often the case when a card provider launches a new deal. But Barclaycard hasn't totally forgotten existing customers: they will get 2.9 per cent on balance transfers, which isn't bad.

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