Credit card: More fee-free transfers, fewer 0% deals

Monday, 28 September 2009 11:38

More credit card companies are offering fee-free balance transfer deals, but 0% deals are dropping away.

There are now 69 cards with balance transfers with no fees - a rise of 19 per cent from a year ago, according to MoneyExpert.com.

However the total number of 0% deals is dropping. There are now 149 cards with interest free introductions.

The lengths of the interest free periods are dropping to an average of 9.6 months.

Some 74 cards offer 12 months or more at 0%.

While avoiding the fees seems like the best option, these deals tend to offer shorter periods at 0%.

Borrowers have to weigh up whether they can clear the balance in the shorter 0% period with no fees or pay the fees and have 0% for longer.

The average balance transfer fee is 2.4 per cent.

Pierre Williams, head of research at MoneyExpert, explained a £5,000 balance transfer with a 2.98 per cent fee for 16 months - the longest available at Virgin Money - would cost £312 a month to clear before interest hits.

But a 12-month 0% balance transfer with no fees could need £417 a month to clear.

Mr Williams said: "Card companies were battling over the longest length of balance transfer deal, and transfer fees crept up. Now they are cutting back on extensive 0% deals and instead looking to offer fee free transfers.

"Clearly an increase in cards offering balance transfers without fees is good news for consumers, but we're also seeing the lengths of introductory deals decreasing."

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