Halifax launches longest 0% transfer and purchase card
The 19/16 All in One card charges no interest on balances transferred to the card for 19 months. A transfer fee of 2% applies for transfers made in the first 90 days, rising to 3% thereafter. The interest-free period on purchases is 16 months.
Halifax said that customers switching a £2,000 balance from a card charging an APR of 18.9% over 19 months with a 2% balance transfer fee to the new 19/16 card would be £471 better off over the 19-month period.
While the card's combination of lengthy 0% interest on balance transfers and purchases will be attractive to some customers, money expert Andrew Hagger of MoneyComms.co.uk told Moneywise there are cards with longer balance transfer terms and lower fees available.
According to Moneywise.co.uk/Compare, the longest 0% balance transfer period on the market is 33 months, as offered by the Barclaycard Platinum With Balance Transfer (33 Mths). Its fee is higher than Halifax's offering, at 2.99%.
However, the 19/16 card's balance transfer fee is undercut by another Halifax card. Its Balance Transfer Credit Card (28 Mths) has a fee that is 0.5 percentage points lower at 1.5% and offers 0% interest on balance transfers for nine months longer.
Halifax's sister company, Bank of Scotland, also has a card offering the same terms (28 months interest-free on balance transfers with a 1.5% fee) called the Platinum Balance Transfer Card (28 Mths).
Meanwhile, Halifax's second new card offering charges 0% interest for up to 10 months on both balance transfers and purchases, with an effective balance transfer fee of just 0.4%.
Hagger explained: "The customer has to pay a 3% fee upfront and then gets a 2.6% refund in the first 90 days. This has become quite common among card providers at the moment but seems an unnecessary inconvenience for the customer just to satisfy the bank's own internal systems."
However, based on a £2,000 balance transfer from a card charging 18.9% APR (variable), with 0% for 10 months and a 0.4% balance transfer fee, moving to this Halifax deal could save customers £273 over the 10 months, Halifax said.
Hagger added: "I think the 10/10 card with just a 0.4% BT fee is an excellent deal for those who know they can switch and clear a balance within the timescale. The cost is minimal at just £8 for a £2,000 balance or £20 on a £5,000 debt."
Commenting on the prospects for the credit card market more generally, Hagger told Moneywise: "The card market shows no signs of slowing down with lenders falling over themselves to try and win new custom, although this may start to change if interest rates start to rise in 2015."
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%.