Credit card giants go to war over balance transfers

Credit card companies are caught in a head-to-head battle to try to bring out the longest 0% balance transfer period.

Halifax has now extended its 0% balance transfer period from 20 months — which for a short time was the longest period on offer on the market — to 22 months on its Balance Transfer credit card, narrowly beating the 21-month offer Barclaycard brought out last Friday.

However, Barclaycard quickly matched Halifax and extended this to 22 months with its Barclaycard Platinum card.

As an extra sweetener, if you apply directly through the Barclaycard site you will get a £20 refund.

Although both cards offer the same time frame for the 0% balance transfer, the deal from Halifax comes with a hefty fee of 3.5%, while Barclaycard has managed to keep fees at 2.9%.

Meanwhile, Barclaycard has withdrawn its 24-month 0% balance transfer period card, which saw 30,000 applications since launch, the equivalent of one every minute — and replaced it with the shorter deal.

[Useful: Compare 0% balance transfer cards]

Other deals

Just behind Barclaycard and Halifax is Virgin, with its 19-month 0% balance transfer period and 2.49% fee.

The length of time 0% balance transfer periods last has doubled in the past five years, according to Defaqto, but these deals are usually restricted to new customers.

David Black, spokesperson for Defaqto, says: "The credit card market abounds with some very attractive offers but it remains the case that the best deals are aimed at new customers. Therefore, those with good credit ratings have a real incentive to change their credit card on a regular basis and should ensure that they choose a card that matches their likely usage."

Balance transfers explained

Q: What is a balance transfer?

A: A balance transfer means you effectively switch the debt from a card with a high interest rate to a card with a 0% balance transfer and while the balance transfer period exists you won't be paying any interest on the debt.

Q: How do I qualify for one?

A: The best deals are for new customers and especially those with a good credit rating. Many card providers will automatically reject you if you already have one of its products, or if you have done in the past 12 to 18 months.

Q: What are the costs involved?

A: You will have to pay a fee of about 3% and some providers have a minimum amount you must transfer. When choosing a card, first work out if the balance transfer fee is worth paying in relation to the amount of debt you have.

Q: What should I watch out for?

A: When the introductory period ends you may be hit with higher than average interest rates. At this point, it may be worth moving the debt over to another card with a balance transfer period (if you are eligible) or if you've cleared the debt changing to another card altogether with a lower interest rate.

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Get cashback with your current account

RBS and Natwest are now offering cashback with their current accounts...

Banks are so keen to lure in current account customers that there is constantly an ever-changing array of incentives for customers keen to abandon their old account and start anew elsewhere.

At the moment, several banks are offering new customers cold hard cash if they transfer their account. Others are now offering cashback if you use a debit card in a similar way to how some credit card providers offer cashback on purchases.

We look at the best offers out there and whether a cash incentive makes opening certain accounts worthwhile.

Cashback on debit card purchases

Some current accounts have been handing out straightforward cash for switching for some time, but Natwest and Royal Bank of Scotland have decided to go down a different route and have started to offer cashback on debit card purchases instead. To qualify, customers need to switch to either RBS Standard Current Account or Natwest Current Plus.

Every time you use your debit card for the first six months you will receive 2% cashback, up to a maximum of £125 (the cashback will be credited to your account). This adds up to £6,250 worth of spending over six months – easily done if you use your debit card for everything possible.
Be warned, however, that ATM withdrawals and cashback in shops don't count. Nor does cash withdrawals within a branch, gambling transactions or money transfers.

To qualify for the deal, customers need to be new to either RBS or Natwest and pay in at least £1,000 a month which equates to a pre-tax salary of about £14,200.

But are the Natwest or RBS current accounts any good?

They’re not bad if you manage to stay in credit, and of course, earning cashback as you spend is a great bonus to have on your account.

However, if you slip into the red, arranged overdrafts are charged at a hefty 19.9% EAR. Unarranged overdrafts are charged at £6 per day. So if you go overdrawn and continue using your debit card to get the cashback, you’ll find the overdraft charges dwarf the cash you get for using the debit card.

The good thing is both accounts are fee-free so there’s no monthly charge to worry about.
Cash in a lump sum

Of course, as I’ve already mentioned, some providers offer cold hard cash for simply opening their current account.

Santander, for example, has been offering money to switch to its current accounts for a while now. New customers opening its Preferred current account get a £100 sign-up bonus.
But that’s not all. They also get 5% in-credit interest on the first £2,500 for the first year (1% after that), plus a 0% overdraft for the first year. The amount of interest-free overdraft you’ll get depends on your circumstances but Santander pledges to match your existing overdraft up to £5,000.

To get the perks you need to pay in £1,000 a month and switch over all your direct debits and standing orders to your new account.

Santander’s Reward and Premium current accounts offer a £100 bonus for signing up too, but these accounts come with a monthly fee and a package of benefits. So you’ll need to work out whether the perks make the fee worthwhile.

Existing Santander current account customers can also earn £25 by recommending a friend to open a current account with the bank. They’ll need to do so through its online referral process for it to count though. You can find out more in Make £125 from your current account.

Similarly, First Direct also offers new customers a £100 joining bonus if they open a 1st Account. However, you’ll need to pay in £1,500 a month to be eligible; this equals a pre-tax salary of about £23,100. Alternatively, you’ll need to have another First Direct product – such as insurance.

Fail to keep up the minimum monthly deposit and you’ll be hit with a £10 monthly fee - so make sure you pay in the minimum £1,500 each month or the £10 charges will soon wipe out the £100 opening bonus.

1st Account holders get a £250 interest-free overdraft and are charged 15.9% AER after that – not the highest rate around but higher than some so this account is best for those who remain in credit pretty much all the time.

The good news is the 1st Account has won several awards for customer service and in the unlikely event that you don’t like it and decide to leave after a year, it will pay you another £100.

Regular cash each month

The Halifax Reward account doesn’t offer a lump sum to new customers but does pay £5 every month an account holder pays in at least £1,000. So that’s £60 a year. The good news is the period of time you’ll get the £5 a month for is currently indefinite – although Halifax reserves the right to change this at a later date if it chooses to. What’s more, you’ll get this whether you’re in credit or overdrawn.

That said, the overdraft charges on the account are pretty high and will soon wipe out the monthly cash incentive. So you’ll be far better off if you stay in the black.


Find out more about this account in Earn £60 a year from an empty current account.

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