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

PROMOTED VIDEO
News
A 1930 image of the Karl Albrecht Spiritousen and Lebensmittel shop, Essen. The shop was opened by Karl and Theo Albrecht’s mother; the brothers later founded Aldi
people
News
Lane Del Rey performing on the Pyramid Stage at Glastonbury 2014
people... but none of them helped me get a record deal, insists Lana Del Rey
Life and Style
fashion Designs are part of feminist art project by a British student
Arts and Entertainment
Dwayne 'The Rock' Johnson stars in Hercules
filmReview: The Rock is a muscular Davy Crockett in this preposterous film, says Geoffrey Macnab
News
i100
Arts and Entertainment
British author Howard Jacobson has been long-listed for the Man Booker Prize
books
Life and Style
tech
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmA cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Sport
Louis van Gaal watches over Nani
transfers
Arts and Entertainment
Flora Spencer-Longhurst as Lavinia, William Houston as Titus Andronicus and Dyfan Dwyfor as Lucius
theatreThe Shakespeare play that proved too much for more than 100 people
News
exclusivePunk icon Viv Albertine on Sid Vicious, complacent white men, and why free love led to rape
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Cost Reporting-MI Packs-Edinburgh-Bank-£350/day

    £300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...

    Insight Analyst – Permanent – Up to £40k – North London

    £35000 - £40000 Per Annum plus 23 days holiday and pension scheme: Clearwater ...

    Test Lead - London - Investment Banking

    £475 - £525 per day: Orgtel: Test Lead, London, Investment Banking, Technical ...

    Business Analyst - Banking - Scotland - £380-£480

    £380 - £480 per day: Orgtel: Business Analyst - Banking - Edinburgh - £380 - ...

    Day In a Page

    Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

    Noel Fielding's 'Luxury Comedy'

    A land of the outright bizarre
    What are the worst 'Word Crimes'?

    What are the worst 'Word Crimes'?

    ‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
    Can Secret Cinema sell 80,000 'Back to the Future' tickets?

    The worst kept secret in cinema

    A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
    Facebook: The new hatched, matched and dispatched

    The new hatched, matched and dispatched

    Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
    Why do we have blood types?

    Are you my type?

    All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
    Honesty box hotels: You decide how much you pay

    Honesty box hotels

    Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
    Commonwealth Games 2014: Why weight of pressure rests easy on Michael Jamieson’s shoulders

    Michael Jamieson: Why weight of pressure rests easy on his shoulders

    The Scottish swimmer is ready for ‘the biggest race of my life’ at the Commonwealth Games
    Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

    The 'scroungers’ fight back

    The welfare claimants battling to alter stereotypes
    Amazing video shows Nasa 'flame extinguishment experiment' in action

    Fireballs in space

    Amazing video shows Nasa's 'flame extinguishment experiment' in action
    A Bible for billionaires

    A Bible for billionaires

    Find out why America's richest men are reading John Brookes
    Paranoid parenting is on the rise - and our children are suffering because of it

    Paranoid parenting is on the rise

    And our children are suffering because of it
    For sale: Island where the Magna Carta was sealed

    Magna Carta Island goes on sale

    Yours for a cool £4m
    Phone hacking scandal special report: The slide into crime at the 'News of the World'

    The hacker's tale: the slide into crime at the 'News of the World'

    Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
    We flinch, but there are degrees of paedophilia

    We flinch, but there are degrees of paedophilia

    Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
    The truth about conspiracy theories is that some require considering

    The truth about conspiracy theories is that some require considering

    For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn