Andrew Hagger of Moneycomms.co uk comments on the seemingly never ending increase in the length of 0% credit card balance transfer deals.
Many people have focused on what’s happened in the savings and mortgage markets in the four years since base rate was cut to 0.5%, but it’s interesting to see how the 0% balance transfer market has changed in that time.
In March 2009 there were 52 0% balance transfer offers with the average term at 9.6 months whereas today there are 71 interest free cards with the average 0% term now standing at 14.2 months.
As evidenced in the table below, Barclaycard and MBNA have been battling tooth and nail to offer the longest term and these two main players appear to be dragging the rest of the market with them.
There are now 19 credit cards offering 0% BT terms of 20 months or longer.
Consumers shouldn’t blindly opt for the card with the longest term unless they intend on using it for the full 0% offer period.
It’s not uncommon for people to switch to 0% and then switch away again or repay the balance well before expiry, so for many people the balance transfer fee is the key area they should be focusing their attention on if they want to keep costs to a minimum.
This table shows that by opting for a few months less than the table topping 24 or 25 month term, the savings in terms of BT fee can be quite substantial for those switching a decent sum of say £5k or more.
With the average credit card rate pushing 18.5% APR for new borrowers, there’s some serious money to be saved if you’re disciplined enough to manage your interest free borrowing carefully, but don’t think that the extra number of long term offers makes it any easier to get accepted.
Lending criteria remains strict and if you haven’t got an A1 credit record, don’t waste your time in applying.
LONG TERM 0% BALANCE TRANSFER CARDS – Ordered by size of BT FEE
|Card||0% BT term (months)||BT fee||BT fee on £2k||BT fee on £5k||BT fee on £8k|
|Lloyds TSB Platinum||21||1.50%||£30||£75||£120|
|Research & Calculations Moneycomms.co.uk 11 March 2013|