The death of 'Mr 0 per cent' is on the cards

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The Independent Online

A death sentence for 0 per cent credit card balance-transfer deals was first whispered by accountants PricewaterhouseCoopers last November.

A death sentence for 0 per cent credit card balance-transfer deals was first whispered by accountants PricewaterhouseCoopers last November.

It became louder when, two months ago, research from the University of Bristol Business School suggested that credit card "rate tarts", who flit between deals to avoid paying interest on their debt, were costing lenders £1bn a year - and that moves were afoot to clamp down.

Now a survey from investment bank Morgan Stanley has just about handed credit card promiscuity to the executioner.

Just 8 per cent of cardholders plan to change their plastic in the coming three months, it found. And barely one in five of those who had recently applied for a new card had been with their existing provider for less than two years.

Cardholders are turning their backs on short-term deals where, if you don't pay off your outstanding balance in time, you slip from the introductory 0 per cent deal to a higher annual percentage rate (APR), says spokesman Patrick Muir. "Most of those currently switching or planning to switch are not moving from one short-term offer to another," he says.

"Lower long-term interest rates and reward schemes look set to become more popular."

Card firms have started clamping down on serial switchers by levying transfer fees.

Egg - the online bank that first introduced the 0 per cent balance-transfer deal five years ago - last month became the latest to charge customers a 2 per cent fee (capped at £50). It was following hard on the heels of providers such as MBNA, Barclaycard and Mint, which already impose such charges.

Although the number of cards offering a fee-free, 0 per cent balance transfer is dwindling, a handful are still resisting the trend.

Halifax's One Visa card and Intelligent Finance's Classic Visa both offer nine months' interest-free credit, says Andy Britchford from financial analyst Moneyfacts.

And if you're happy to apply online, Marks & Spencer's &More card levies no fee for shifting your balance and offers a 0 per cent interest-free deal for nine months on both transfers and purchases.

With fewer such deals available, try to pay off as much of the debt as possible before the end of the 0 per cent deal; getting another one is likely to become much harder.

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