Many card companies charge more than £20 if a customer is just one day late making a payment or goes over his or her credit limit. The credit card industry rakes in £300m a year from such fees. Following the OFT’s ruling, these charges will have to be capped at £12. But, rather than taking the dint to profits, providers are expected to recoup the revenue they will lose from the reduction in charges in other ways. Uswitch.com, a comparison website, thinks that providers could increase the interest rates they charge by around 2% in order to claw back the money. And research group Defaqto is warning that interest free deals will be watered down.
So if you are wanting to take advantage of one of the 0% credit card deals
available, it could be worth acting sooner rather than later. The good news
is, that for the time being at least, there are still plenty to choose from.
You can find details of all the deals available at comparison websites such
as moneysupermarket.com, uswitch.com or moneyfacts.co.uk. Here we guide you
through some of the best offers.
Sainsbury’s Bank has launched a new visa card with a 12-month interest
free period for purchases. This is the longest 0% purchase deal available. Once
the introductory offer ends you will be charged the standard rate of interest,
which is 15.9%. The card is also good if you are looking to make a balance transfer.
The rate is 5.9% and this lasts until the balance is cleared. However, you should
avoid transferring a balance onto the card if you are going to use it for spending
as well because, like most providers, Sainsbury’s Bank clear the cheapest
debt first so you will accrue interest at the highest rate. If you want to take
advantage of this deal, you will have to act quickly as it will only be available
until the end of May.
If you want a 0% deal on both purchases and balance transfers, the Natwest Classic and Royal Bank of Scotland Platinum are the best cards. Both offer nine-month interest-free periods. Both cards levy a 2% fee for balance transfers although this is capped at £49. You should aim to clear your balance by the end of the introductory period as the interest rate rises to 16.9%. If you have not paid off your debt by then, move it to a different card with a lower rate.
If you are just wanting to clear a debt and don’t want to use your credit card for spending, Capital One has just launched a new card which has a 0% offer on balance transfers that runs until August 2007. There is a 2% balance transfer fee however, with no upper cap. The standard rate on this card is 15.9%.
Alternatively, you could go for a Halifax One card. The interest free period for balance transfers is shorter – it lasts for 12 months, but the maximum transfer fee that you can be charged is £50. Therefore this maybe a better option if you are looking to switch a large balance, but are confident that you will be able to clear it during the introductory period. At the end of the interest free period, the rate jumps to 15.9%.
The future of 0% deals maybe under threat but for the time being at least there are still plenty to choose from. You can find details of all the deals available at comparison websites
