Best Balance Transfer Card Deals

Big spenders win in credit card war as companies bid to lure consumers

In recent days, Barclaycard has launched a card offering interest-free balance transfers for 20 months.

This was just days after it had improved its best offer to 18 months to trump rival Nationwide.

Then, last week, MBNA launched a leading rewards card paying up to 1.5 pc cash for those who shopped in certain supermarkets.

There are even tantalising offers for those who want to use their credit card abroad without being hit with foreign exchange charges, which can be as much as 3 pc.

Credit card companies have had to make massive changes to the way they do business this year.

Since January, they have had to change the order in which debts are repaid  -  so now when you make your monthly repayment, the most expensive debt is cleared first.

Also, new European rules mean that it is easier for banks to advertise one rate, but give you a different one when you apply for a card.

Under the old UK rules, a bank could advertise a rate if two-thirds of customers were accepted for it.

But the new regime means they can advertise a 'representative' rate provided 51 pc of customers get it.

It means that, in effect, up to half of customers can be charged around 5 percentage points more than the rate they thought they were going to get.

Kevin Mountford, head of credit cards at comparison website Moneysupermarket.com, says: 'This price war is good for consumers  -  but it is likely to benefit only the very better off as card companies are being allowed to be more and more choosy.'

So what are the pick of the cards?

Top of the pile in this fiercely fought category is Barclaycard, which is offering 20 months interest-free on its platinum with Balance Transfer Visa. But along with this came an increase in the fee for transferring a balance from 2.9 pc to 3.2 pc.

Transferring a £5,000 balance will cost £160, compared with £145 previously. on top of this, the interest rate charged on purchases if you don't clear your balance is hiked from an average 16.9pc to 17.5pc.

Shoppers need to choose whether they want to have interest-free purchases or cashback.

Evade Credit Card Balance Transfers Pitfalls | CreditCards4All.com

Despite many card providers suffering falling profits and staggering rises in the level of bad debts, competition is still rife within the market and providers continue to launch headline 'best buy' deals. Andrew Britchford, credit card analyst from Moneyfacts.co.uk explains how consumers can avoid some of the common pitfalls associated with credit card deals and make the best of the offers available. Choosing the right card can be more complicated than you may think.

'When choosing a credit card there are many factors to consider in addition to the rate, including introductory offers, balance transfer deals, fees, incentives and, if you dare to venture into the small print, the number of interest free days, repayment order and how the interest is charged. These factors can soon reduce the benefits of an apparently great deal.

'Consumers looking for a multi purpose card may find it difficult to find a card that offers competitive terms across the range of account facilities. Providers often dangle one carrot by way of a competitive deal either on balance transfer rates, introductory or standard purchase rates in the hope the consumer will feast upon other facilities, and this is often where providers can earn.

'One key factor and one that is not commonly considered, is the order of repayment. By this we mean, if the consumer has items of their bill generated by different means, for example cash advances, balance transfers or purchases, if a partial repayment is made, what does it repay first? Does it repay the first transaction by date order or by the order of cost?

'A prime example of how the repayment order affects an offer is the current deal, reportedly only a trial at present, available online via the Capital One platinum card. The new card offers a market leading 15 months' 0% on balance transfers, but the seemingly small condition of having to spend £100 on purchases before 1 July makes it almost impossible to obtain this deal in full. By encouraging consumers to use the card for dual purpose, consumers could potentially see their 0% deal vanish.

'The catch lies in the order of repayments. A dutiful consumer making their £100 purchase, then fully repaying this on their next statement will probably expect to pay no interest. But this is not the case - the £100 repayment would go towards repaying the balance transfer, while the £100 purchase would remain accruing interest of 15.9% until the combined total of the balance transfer and balance is fully repaid (assuming no further transactions).