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Credit card price war continues

Barclaycard has responded to its rivals by introducing a credit card which charges no interest on balance transfers for 30 months.

Britain’s credit-card lenders are continuing their battle for customers in 2014 with the launch of several new long-term balance-transfer deals.

MBNA, Santander and Tesco have each just unveiled cards which allow borrowers to move existing debts and pay no interest for the first 29 months.

No interest until 2016

But Barclaycard has now reacted by introducing a 30-month deal.

This means customers could move a debt today and pay no interest on it until the summer of 2016.

The slew of New Year offers is a sign that the fierce competition which characterised the credit-card market in 2013 is set to continue.

Lenders are battling especially hard for new business this month.

January debt crisis

This is because many people will be looking to switch to a new card to cut their repayments following weeks of higher-than-average spending in the run-up to Christmas.

The top balance-transfer cards charge no interest for an initial period, but customers almost always face an initial fee for moving their debts.

This is expressed as a percentage of the amount transferred: Barclaycard’s new 30-month deal charges 2.89 per cent.

Watch out for transfer fees

On their 29-month offers, MBNASantander and Tesco are charging transfer fees of 2.89 per cent, 3 per cent and 2.9 per cent respectively.

The Tesco card offers Clubcard points on any spending, which is an added incentive to sign up.

But Barclaycard’s own 29-month deal charges just 2.49 per cent for transfers.

Opportunity to clear debts

As well as the obvious saving in interest charges, long-term 0 per cent balance-transfer deals give borrowers a good chance to clear their debts before standard interest rates – typically between 15 per cent and 20 per cent at present – kick in.

For example, customers on a 30-month interest-free card could set up a direct debit to clear a thirtieth of what they owe every month.

This would ensure they were debt-free when the balance-transfer deal ran out.

Nerys Lewis, head of credit cards at Confused.com, said it was especially noteworthy that Santander had joined the battle.

Chance to switch

Lenders generally do not allow transfers from existing customers, so current Barclaycard holders, for example, will not be able to take advantage of the firm’s new offer.

"But it's been so long since Santander had a good credit card deal, there should be a good amount of people who can transfer a balance to them," Lewis said.

"There's never been a better time to get a balance transfer card, with 14 cards now offering over two years’ interest-free on transfers, compared to none this time last year."

But Lewis warned that providers were still quite strict when it came to approving applications.

"This means it's worth thinking about your credit rating and using a tool such as Confused.com’s Card Matcher to find out which cards are most likely to accept you.

"It's also worth remembering to pay your bills on time, as missing even one payment can mean that you'll lose your zero per cent deal and end up out of pocket."

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Chris Torney

Chris Torney

Chris is personal finance editor at the Daily Express. He's been a journalist for more than 10 years and contributes to a wide range of finance and business titles.Read more from Chris



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