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Meanwhile, Barclaycard has withdrawn its 24-month 0% balance transfer period card, which saw 30,000 applications since launch, the equivalent of one every minute — and replaced it with the shorter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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Battle of the 22 month 0% balance transfer cards!

Category: Credit cards
Date: 23/08/2011

It's difficult to keep up with everything that's happening in the 0% balance transfer market. Competition is fierce!

Recently Barclaycard released the longest ever 0% balance transfer card – for 24 months. It was an aggressive move and although no-one's offering 0% for 24 months at the moment, there are two cards offering 0% for 22 months.

Twenty-two months, to put it another way, is the second longest 0% balance transfer deal ever offered.

The 2 top 0% balance transfer credit cards

	Halifax Balance Transfer Credit Card Mastercard	Barclaycard Extended Balance Transfer Visa
Introductory Balance Transfer Period	0% for 22 months	0% for 22 months
Balance Transfer Fee	3.50% (min £3.00)	2.90% (min £7.25)
APR	17.9%	17.5%
Representative Example	Based on a credit limit of £1,200 charged at 17.9% variable per annum for purchases. Representative 17.9% APR variable.	Based on a credit limit of £1,200 charged at 17.5% variable per annum for purchases. Representative 17.5% APR variable.

Halifax and Barclaycard are battling it out to be the top card. Although neither would win a catchy name competition, Barclaycard just has the edge over Halifax. That's because:

• Barclaycard offers a lower balance transfer fee
• Barclaycard offers a lower Representative APR
• Halifax is limiting its balance transfer deal to balance transfers of up to £3,000, while Barclaycard imposes no limit (other than the credit limit it offers you)

Although the Halifax Balance Transfer Credit Card is a little more expensive to transfer a balance to, it might be suitable for you if you need to transfer credit card balances away from Barclaycard. This is because you can't transfer balances you already have with a particular credit card provider, to a new promotional rate with that same provider.

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