Clare's consumer finance advice

Every week Clare Francis, financial journalist and editor of comparison site moneysupermarket.com will offer tips and advice on all things money-related to help iVillagers make the most of their hard-earned cash. From energy bills to car insurance; credit cards to children’s savings accounts; mortgages to discount vouchers Clare will show you how to make sure you’re getting the best deal

Escape interest on your credit card debt!

By Clare Francis on 19 Jul 2011 No comments

If you have been wrestling with a stubborn and expensive balance on your credit card, a breath of fresh air could be waiting just around the corner. Barclaycard has launched a new card, the Platinum Balance Transfer card, with a 24-month 0% period. This is the longest interest-free offer we’ve ever had.

The move from Barclaycard is the latest in a series of rumblings in the credit card market as providers battle for the top spot in the best buy tables.

Last Thursday for example, arch rival Halifax launched its own balance transfer credit card which carries a 20-month 0% interest period, a transfer fee of 3% and a representative APR of 16.9% (variable). (The representative APR is the rate of interest you’ll be charged when the 0% period ends and it must be offered to at least 51% of new customers.) This took Halifax the top of the all-important best buy table for balance transfer cards – a spot Barclaycard clearly didn’t want to give up.

It responded by replacing its 20-month balance transfer offer with the new 24-month product. It’s quite incredible to think you can now take advantage of a two-year interest- free credit card. This is great news, particularly for those who are currently paying a high rate of interest on a credit card debt.

What’s the deal?

The Barclaycard Platinum Balance Transfer card has a 24-month 0% period and there is a 3.2% transfer fee, although 0.4% of this is refunded if you transfer a balance onto the card within the first 60 days. It’s important to try and clear your debt within the interest-free period because once it ends you’ll be charged the standard representative APR which is 17.9% (variable).

Don’t be tempted to spend on this card as well though as the interest rate on purchases only lasts for three months after which you’ll be charged the standard rate of 17.9%.

What should you do if you want a credit card to spend on too?

If you want a credit card for purchases, you could either consider taking two cards out – one to transfer your existing credit card debt onto and another that offers a long 0% period on purchases.

Tesco and M&S have the best deals for purchases as both offer a 15-month 0% period. The Tesco Clubcard Credit card has a representative APR of 16.9% (variable) while the standard rate on the M&S Credit Card is 15.9% variable.

The other option is to go for a credit card that is good for both balance transfers and purchases. You’ll have to accept a shorter interest-free period, but you can still benefit from 0% periods that last longer than a year. The market-leader is the Barclaycard Platinum with Purchase card which offers a 14-month 0% period on both balance transfers and purchases. There is a 2.9% balance transfer fee and the representative APR is 18.9% (variable).

...and save an average of £597

Play your cards right, and you can save a fortune. Our research shows that the average balance on a credit card in the UK is £2,221. Someone transferring this balance to Barclaycard’s new Platinum Balance Transfer card would save up to £597 in interest over the 24 months, even once the cost of the transfer fee has been factored in.

However, bear in mind that – like all other providers – Barclaycard won’t accept a balance transfer from one of its own cards. This means if your nuisance credit card debt is already with Barclaycard, you will have to look elsewhere. But at least with the increasingly favourable credit card market, you will be met with plenty of options...

For more information about the leading credit card deals, visit moneysupermarket.com’s credit card channel.