2016 brings in new rate war between credit card providers

14th January 2016


The New Year has already ushered in a renewed rate war between credit card providers, all looking to attract new customers.

Research from Moneyfacts.co.uk found that Bank of Scotland, Halifax, Lloyds Bank, TSB, Barclaycard and Tesco Bank have all made fresh move to make changes to their balance transfer credit cards since the start of 2016, typically by extending the interest-free terms or reducing the introductory balance transfer fee.

Virgin Money also launched a 38-month 0% interest balance transfer deal, albeit with a 2.79% fee.

As a result, the average interest-free balance transfer term has risen year-on-year to the highest on record at 590 days, up from 468 a year ago.

Balance transfer fees have also fallen, with the average now sitting at 2.21%, down from 2.52% last year.

Rachel Springall, finance expert at Moneyfacts.co.uk said: “As spenders recover from the excesses of the festive season, the start of a new year can trigger the desire to tackle outstanding debts.

“Heightened rivalry in the balance transfer market will therefore come as welcome news to borrowers, particularly those who want to avoid large fees – many of the latest deals now charge very low balance transfer fees, which makes moving credit card balances far more cost-effective.”

However Springall highlighted that while these cards do give borrowers longer to repay debt without interest adding to the bill, people must ensure they pay more than the minimum monthly repayment and clear the balance before the deal ends. Interest that averages around 20.09% per annum will be charged once the initial offer expires, which could then outweigh the advantages of taking out one of these deals.

She added: “In addition to the lucrative 0% interest balance transfer deals, providers are keen to promote money transfers, but these kinds of transfers may be more unfamiliar to borrowers.

“As a result, providers appear to be concentrating on pushing their balance transfer cards into the Best Buys and offering money transfers on the side, which may aid their appeal to those who are sinking into their overdraft.”


Credit card changes for balance transfers in 2016 0% BT deal before update 0% BT dealnow Intro BT fee before update Intro BT feenow
Tesco Bank Clubcard Balance Transfer MasterCard 37 months 38 months 2.90% 2.70%
TSB Online Platinum MasterCard 28 months 28 months 3.00% 0.70%
Lloyds Choice Rewards Amex/MC (b) 28 months 30 months 3.00% 3.00%
Halifax All in One MasterCard 28 months 30 months 1.00% 1.00%
Barclaycard Platinum Purchase & Balance Transfer Visa (b) 16 months 20 months 1.49% 1.49%
Barclaycard Platinum 32 Month Balance Transfer Visa 32 months 32 months 1.15% 1.13%
Bank of Scotland Platinum 30 Month Balance Transfer Visa 28 months 30 months 1.00% 1.00%
(b) Branch.0% interest terms and fees shown are introductory.BT = Balance transfer
Jan-14 Jan-15 Jul-15 Jan-16
Average balance transfer term (days) 413 468 539 590
Source: www.moneyfacts.co.uk 12.1.16


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