Barclaycard launches 26-month 0% balance transfer deal
Barclaycard has introduced a credit card offering an unprecedented 26 months 0% interest on balance transfers as the competition for the most attractive credit cards hots up.
The card comes with a 3.5% fee on balance transfers and 0% interest on purchases for six months.
The move follows hot on the heels of Tesco launching a card this week offering 0% interest on balance transfers for 25 months with a 2.9% fee, which enjoyed a brief spell at the top of the table.
Competition hotting up
Recently several providers have been vying for the longest period of 0% interest on balance transfers with Barclaycard, Tesco and Halifax all trying to outdo each other.
Balance transfer cards are a great way to consolidate debts cheaply and pay off more expensive loans. But unless it also offers 0% on purchases it doesn't usually make sense to spend on the card. Spenders should look instead for cards offering the longest 0% on purchases.
Currently, the best 0% purchase card is the Halifax Purchase Credit card, which offers 0% interest on purchases for 17 months, with an APR of 16.9% from there after.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
Moving money from one account to another, whether switching bank accounts or more likely transferring the outstanding balance on your credit card to another card that charges a lower – or 0% – rate of interest. Some card providers may charge a transfer fee that can be a percentage of the balance transferred.
This is used to compare interest rates for borrowing. It is the total (or “gross”) interest you’ll pay over the life of a loan, including charges and fees. For credit cards where interest is charged at more frequent intervals, the APR includes a “compounding” effect (paying interest on interest). So for a credit card charging 2% interest a month (equating to 24% a year), the APR would actually be 26.82%.