The interest is 0 per cent but the fee isn't

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The Independent Online

Last year's rumble of a possible end to credit card 0 per cent introductory balance transfers is getting louder.

Last August, Barclaycard took the plunge and levied a 2 per cent fee on the amount transferred to the card - up to a maximum of £35.

MBNA followed suit a month later and prompted an alert from accountants Pricewaterhouse-Coopers that "rate tarts" who flit from one 0 per cent deal to another could face an end to their promiscuity.

Now the momentum looks to be gathering with Mint (owned by Royal Bank of Scotland) emerging as the latest provider to introduce a 2 per cent fee for its 0 per cent balance transfer deal (capped at £40), which lasts until 1 September.

But, in a twist, this deal is temporary: you won't have to pay the fee after 31 March, though people who wait until then to transfer to Mint will have less time to try to pay off their balance transfer before it slides from the 0 per cent deal to the firm's standard annual percentage rate (APR), currently 12.9., a website that compares financial products, says providers have introduced charges to claw back money from cheap deals for customers. There may now be a limit to how far they can go with 0 per cent transfer deals, given that the longer the period, the harder it is to make a profit, warns spokesman Stuart Glendinning. "Charging a fee is one way of recouping losses accruing from customers that frequently 'churn' their debt from one card to another without using the card for purchases.

"This is bad news for customers," he adds. "You should transfer your balance for free while you still can."

If you are looking for a fee-free option, consider the Halifax One Visa card, which offers 0 per cent on both new purchases and balance transfers for the first nine months, before switching to a standard APR of 9.9. With this card, according to, you could save £120.50 on a £2,500 debt paid off at £100 a month, compared with Barclaycard Platinum. The Barclaycard also offers an interest-free deal on balance transfers until 1 September, but levies the 2 per cent fee capped at £35.

The Lloyds TSB Advance card is an option if you only want to transfer a debt. It offers 0 per cent on transfers for 12 months with no fee, but has no interest-free period on purchases.

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