Credit card firms are pushing the limits for new customers by offering record 0% interest free
periods for borrowers who switch loyalties.
Barclaycard is leading the pack with a 20-month interest free balance transfer period.
Not far behind are MBNA Platinum and Virgin Money with 18-month interest free balance transfer
periods. Lagging slightly behind is Nationwide with a similar 17-month offer.
All three are likely to equal or better the Barclaycard offer in the near future.
The problem for credit card companies is how to maintain momentum when no one is borrowing to
spend.
They want to make profits but few new customers are looking for cards – and if they are, their
credit histories do not qualify them for having one.
This leaves credit card companies only one place to look for new customers – other credit card
companies.
It’s a kill or be killed market – if lenders do not offer their best customers good rates and incentives,
they lose them to other credit card companies who will.
Balance transfers can save card payers cash
The question for card switchers is who is offering the best overall deal and not just the most
attractive headline rate?
Although Barclaycard has the longest interest free period on balance transfers, the balance transfer
fee is 3.2% and the long-term interest rate of 17.5% variable APR are the highest when compared to
MBNA Platinum, Virgin Money and Nationwide.
If the switching fee wipes out any savings on interest, then unless some of the other features are
attractive, swapping providers is probably not worthwhile.
All three cards have a three-month 0% interest on purchases period – but Nationwide has the lowest
variable APR at 15.9% and MBNA Platinum has the lowest balance transfer fee at 2.88%
These deals are good for borrowers who want to save money on their monthly credit card
repayments., but 0% balance transfer deals generally have a higher interest rate than other cards and
you have to keep within the terms of the offer to benefit from the deal.
Anyone who wants to benefit from these rates will have to swap providers as they are only open to
new customers.
