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; request a free guide on NISAs from Hargreaves Lansdown

PROMOTED VIDEO
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

    Selby Jennings: C++ Developer – Hedge Fund – New York

    $80000 - $110000 per annum, Benefits: Bonus and Employee Investment Scheme: Se...

    Selby Jennings: Java Developer Enterprise Specialist –Paris,France

    €30000 - €50000 per annum, Benefits: Competitive Bonus: Selby Jennings: Java D...

    Selby Jennings: QA Engineer Lead – Hedge Fund – Chicago

    $60000 - $90000 per annum, Benefits: Competitive Bonus and Employee Investment ...

    Selby Jennings: Buy Side Sales / Account Manager – Fixed Income Market Data – Frankfurt Germany

    circa 65,000 EUR + Bonus + Benefits: Selby Jennings: Recruiting a Sales Associ...

    Day In a Page

    In a world of Saudi bullying, right-wing Israeli ministers and the twilight of Obama, Iran is looking like a possible policeman of the Gulf

    Iran is shifting from pariah to possible future policeman of the Gulf

    Robert Fisk on our crisis with Iran
    The young are the new poor: A third of young people pushed into poverty

    The young are the new poor

    Sharp increase in the number of under-25s living in poverty
    Greens on the march: ‘We could be on the edge of something very big’

    Greens on the march

    ‘We could be on the edge of something very big’
    Revealed: the case against Bill Cosby - through the stories of his accusers

    Revealed: the case against Bill Cosby

    Through the stories of his accusers
    Why are words like 'mongol' and 'mongoloid' still bandied about as insults?

    The Meaning of Mongol

    Why are the words 'mongol' and 'mongoloid' still bandied about as insults?
    Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

    Kenyans still waiting for justice over Mau Mau uprising

    Thousands join class action over Britain's role in the emergency
    Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

    The last Christians in Iraq

    After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
    Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Britain braced for Black Friday
    Bill Cosby's persona goes from America's dad to date-rape drugs

    From America's dad to date-rape drugs

    Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
    Clare Balding: 'Women's sport is kicking off at last'

    Clare Balding: 'Women's sport is kicking off at last'

    As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
    Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

    Oh come, all ye multi-faithful

    The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
    Dr Charles Heatley: The GP off to do battle in the war against Ebola

    The GP off to do battle in the war against Ebola

    Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
    Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

    Flogging vlogging

    First video bloggers conquered YouTube. Now they want us to buy their books
    Saturday Night Live vs The Daily Show: US channels wage comedy star wars

    Saturday Night Live vs The Daily Show

    US channels wage comedy star wars
    When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

    When is a wine made in Piedmont not a Piemonte wine?

    When EU rules make Italian vineyards invisible