9th March 2016
Interest-free balance transfer periods have almost doubled since 2012 with the longest deal currently available almost double the market-leading offer from Tesco Bank of 40-months interest free.
According to figures from GoCompare.com the fee-free periods offered to those who like to pay on plastic have rocketed by 82% since 2012
With a balance transfer credit card, you can avoid paying interest on the amount you transfer in for a set period of time – in some cases this can be more than three years. This will let you repay the debt gradually without having to swim against the tide of compounding interest. A balance transfer credit card may charge you a one-off fee initially, but then you’ll get a long period where no interest is charged. It’s important to clear your debt before the end of the 0% period to avoid being charged at the standard APR – typically around 18.9%.
Matt Sanders, credit card spokesperson for the comparison website credits the boom in 0% balance transfer periods to providers fighting for new customers in an increasingly competitive market.
“Over the past few years there has been a massive surge in competition in the credit card market as providers fight to take the top spot in the best-buy tables,” he says.
“A few years ago a three-year 0% balance transfer period would have been almost inconceivable; however, as we’ve entered 2016 we’re already seeing cards that exceed that, with no sign of these increasingly long periods coming to an end anytime soon.”
When looking for a balance transfer card, consumers must carefully do the maths to ensure that they are getting a good deal. It is crucial to consider whether you will need the full amount of time offered by the card to pay it off. For those who are looking to transfer smaller debts, or are confident in being able to pay off the debt over sooner, then a card with a shorter 0% period and a lower or no balance transfer fee may be worth considering. It’s also worth remembering that while there are some extremely long deals available right now, the headline rates are typically reserved for those with a good credit history.
“Be aware that frequently applying for credit cards can negatively affect your credit rating which can impact your chances of getting credit in the future,” warns Sanders.
“When looking for a new card, be sure to use a comparison site which offers a ‘soft search’ service that can tell you how likely you are to be accepted for a card before you apply, without impacting your credit rating,” he says.