On balance, 0% credit card transfer deals are bad news

The longer you have to pay, the less imperative there is to clear the debt

Credit cards should be paid off, not endlessly extended (Getty)

Have you ever been tempted by a 0 per cent balance transfer credit card deal? If you have debt, transferring it to a 0 per cent rate can seem like a great idea to ease your financial burden. But there are two key dangers that have always concerned me.

The first is the cost of transferring a balance. A typical charge is 3 per cent. So if you transferred £5,000 you’d have to pay £150. However most plastic cards will let you add that extra debt to the card.

And that brings me to my second fear. Because the deals now last for years, there’s no real encouragement to get on and pay off the debt and take advantage of the no-interest period. Psychologically, the longer you have to repay something, the less imperative there is to get on with actually clearing the debt.

So I find it extremely worrying that Halifax this week launched a 40-month long balance transfer deal . The Halifax isn’t to blame; the move is just the latest in an ongoing battle between plastic card companies to have the longest and, on the face of it, most attractive deal.

But giving someone three years and four months of no interest on their debt seems a little irresponsible. If it was linked to regular payments to encourage people to be debt clear by the end of the term, that would be good.

But it’s not. The deals seem designed to encourage people to not to worry about their debts rather than face up to them. If they do nothing they’ll eventually be switched to the credit card firm’s regular rate, normally around 19 per cent, when interest will then mount up very quickly.

There are those who may be happy to pay £100 or so to simply switch their debt onto a new card every few years, but that’s simply delaying the inevitable time when eventually the debt will have to be paid. Being encouraged to delay dealing with debt is no good for anyone. Credit cards should start being responsible with their deals and that means helping people clear their debt, not trying to persuade them to extend it.