Lloyds launches 33-month 0% balance transfer credit card
The credit card offers 33 months interest-free on balance transfers made within the first 90 days and 0% interest on purchases for the first six months, with a 2.85% transfer fee.
The move comes as more and more credit card providers are offering attractive 0% transfer deals in an attempt to gather new business. Last month Tesco and Sainsbury's Bank both increased their interest-free periods to 33 months, while Barclaycard announced its longest ever period of 34 months - currently the longest 0% period on the market.
Finance expert, Andrew Hagger of Moneycomms.co.uk said the battle in the credit card market shows no signs of slowing down - but warned that the offers won't be available for ever and that consumers should always consider the fees they pay to transfer a balance.
He said: "Credit card balance transfers are big business and according to BBA statistics 42% of all credit card borrowing currently outstanding is now interest free compared with 34% two years ago. Approximately 500,000 balance transfers are taking place each month at an average of around £2,200.
"There are now medium and shorter term markets each with lower balance transfer fees, catering for people that don't need nigh on three years to clear their borrowing.
"For example, switching a £6,000 balance with the longest term Barclaycard deal will cost you £179.40 up front, whereas 21 months with MBNA Everyday will set you back just £90 and 15 months with TSB a mere £48.
"At the other end of the scale Tesco Bank offers 12 months interest free and no BT fee - an excellent way of parking some debt if you know you have a windfall coming or an annual bonus on its way.
"These low cost credit deals won't be around for ever, particularly when base rate awakens from its slumber, possibly as early as the first half of 2015."
An unexpected one-off financial gain in cash or shares, generally when mutual building societies convert to stock market-quoted banks. Also windfall tax, a one-off tax imposed by government. The UK government applied such a measure in the Budget of July 1997 on the profits of privatised utilities companies.
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.
Also referred to as the bank rate or the minimum lending rate, the Bank of England base rate is the lowest rate the Bank uses to discount bills of exchange. This affects consumers as it is used by mainstream lenders and banks as the basis for calculating interest rates on mortgages, loans and savings.
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.