Money Insider: Credit card firms fight for your custom

In a week where the British Bankers Association reported that credit card borrowing is growing at its fastest rate in five years, card providers are tripping over themselves with new deals as they try to lure in new customers.

The fierce battle to offer the longest zero per cent term for balance transfers shows no sign of abating, with new deals launched by Barclaycard (32 months, 2.99 per cent fee), MBNA (31 months, 2.89 per cent fee) and Sainsbury's Bank (29 months, 2.89 per cent fee) in the last week alone.

Barclaycard appears to have a marketing strategy where it looks to dominate the best buy table on the big comparison websites to maximise the volume of business that this delivers. As soon as a competitor gets close to the top two slots it reacts almost immediately and moves the 0 per cent goal posts just that little bit further to protect its precious top position.

If you've got a nagging credit card bill that needs shifting and are financially disciplined, there are some good savings to be made. For example borrowing £3,000 interest-free with the latest long-term Barclaycard offer would only cost you £89.70, the 2.99 per cent balance transfer fee. If you then paid £96.55 per month for 32 months the balance and fee will be cleared with no interest charges to pay.

By comparison if you wanted to clear a £3,000 balance on a card at the market average of 17.4 per cent APR in 32 months you'd have to pay £117 per month, some £713 more expensive over the full term than the 0 per cent deal above.

Just because lenders appear to be tripping over themselves to offer longer-term interest-free deals it doesn't mean they are easier to get hold of.

Card providers are increasingly picky and you will need a near-perfect record to get the best deals. If yours doesn't meet the criteria you may be offered a shorter 0 per cent deal, possibly a higher interest rate and also a fairly small credit limit – while others will find their applications declined.

If you are accepted make sure you don't exceed your limit or miss a monthly payment as lenders use this as a handy get out clause to terminate the introductory promotional deal on the spot.

Another tip: don't blindly opt for the card with the longest interest-free period unless you intend on using it for the full term.

It's not uncommon for customers to switch to 0 per cent and then switch away again or repay the balance well before expiry, so for many people the balance transfer fee is also a key area they should consider if they want to keep costs to a minimum.

The one-off balance transfer fee is much cheaper if you opt for a term a few months shorter than the table-topping cards. For example, the Halifax Balance Transfer Credit Card at 24 months has a balance transfer fee currently just 1.5 per cent, or the MBNA Everyday Card at 21 months is also 1.5 per cent, both almost half Barclaycard's 2.99 per cent.

If you're someone who can repay over an even shorter timescale, perhaps from an annual bonus, then the new Sainsbury's Bank Nectar Low Fee credit card charges the lowest one-off balance transfer fee of just 0.5 per cent with 12 months at 0 per cent. Alternatively the Fluid Low Fee card also offers one year interest-free and comes with a balance transfer fee of only 0.75 per cent.

When 0 per cent credit card deals burst through the 30-month barrier many people thought that was as far as they'd go, but with competition for those prized best buy slots as keen as ever, a card with interest-free switching for a full three years by the end of 2014 isn't out of the question.

Andrew Hagger is an independent personal finance analyst from www.money comms.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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