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By Rachel Preece
Staff Writer
7 August 2008
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COMPETITION between credit card issuers to offer the longest 0% balance transfer has continued to heat up this week as many issuers re-launch and extend their 0% promotional periods.
Recently, Capital One extended their 0% balance period to 16 months, putting them in pole position and offering the longest 0% deal ever seen on balance transfers. [Capital One Balance Transfer and Purchase credit card review]
However, Barclaycard recently joined Virgin and Capital One as the UK's current third credit card company to offer a 0% period of 15 months in length, and the balance transfer market shows no signs of slowing down.
With news that Tesco have upped their credit card balance transfers offers from 13 to 14 months, are 0% balance transfer deals set to become even longer?
Credit card issuers working harder to keep customers on board
With so many credit card issuers extending their 0% rates, could this mean that the balance transfer market is unaffected by the credit crunch, or perhaps the fierce competition is merely a sign of issuing banks trying to strengthen their profits.
With the credit crunch came a tightening of lending criteria by many lenders – meaning that many deals were only for those with an excellent credit history. As a result of this, credit card issuers are engaging in a battle for the very best customers, and they’re all working hard to attract and retain them.
So, if your credit rating is good to excellent, there are some very enticing credit cards offers out there.
Is a 0% deal for you?
If you have a lot of debts to pay off, a 16 month 0% balance transfer deal might be ideal. 0% balance transfer credit cards are often an excellent way to save money, as you avoid accumulating interest on higher rate credit cards or store cards.
There are a few things to watch out for to make sure you save money on your 0% balance transfer. One of them is to make sure that you don't spend on the balance transfer credit card unless it offers an equal length 0% purchase period. If not, you may end up paying charges in interest as a result of the allocation of payments clause. [Read our allocation of payments clause FAQ]
It’s also a bad idea to withdraw cash using your 0% balance transfer credit card, as cash transactions are affected by the allocation of payments clause too, often carry much higher rates of interest than purchases and also tend to carry handling fees. So for buying traveller's cheques or foreign money, remember to use your debit card or cash and go to the Post Office for commission-free exchanges.
Remember to keep up with your minimum repayments and try to pay back as much as you can comfortable afford to - it helps avoid the need to transfer again when the 0% period ends.
0% balance transfer deals are becoming ever-more attractive as credit card issuers vie for our custom, but remember that they're unadvisable to use to make purchases, withdraw cash or to use abroad.
Keep an eye out for the latest deals on offer, and you can make great savings with a 0% balance transfer credit card.
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