We’re often misled by ‘0 per cent’ balance transfer credit card offers and only one in 20 of us actually understands the true cost after being fooled by sneaky fees, according to Which? research published today.
The consumer group has urged the City watchdog to take a closer look at the offers after its research revealed that seven in ten people wrongly thought the transfer was completely free, even though they were shown the fee.
It estimates that consumers pay around £334m in balance transfer fees each year, often because they mistakenly pick the wrong card, which often proves to be an expensive mistake.
In its study a third picked the card with the lowest APR, even though it had a higher balance transfer fee. The decision would leave with them with a card that would have cost them three times as much.
In what seems an extraordinarily timely move Halifax has today launched a new credit card offering 0 per cent interest for up to 20 months, with no transfer fee. The 20 Month Balance Transfer Card offers the longest interest free period without a balance transfer fee, the Lloyds-owned bank claims although, in truth, it just replaces its own similar 18 Month 0 per cent Balance Transfer card which also had no balance transfer fee ,
However the go-to rate - charged after the promotional period ends - is 18.9 per cent. While that’s pretty standard for credit cards, there are much cheaper deals available on the market, although not with such a long interest-free period.
It may pay to get a cheaper rate card now, for longer-term savings. In fact the Halifax has a card charging just 6.4 per cent.