After the pain of the credit squeeze, the credit card companies have been out in force for the last few months; competing to offer to longest 0% balance transfer or purchase deals in order to win your business.
These deals have all come with a sting in the tail, but the latest developments could take the pain out of the process.
The deals have been flowing thick and fast for the past few months. Recently Nationwide Building Society topped the table with 26 months interest-free for balance transfers - but after just one day at the top Barclaycard trumped it with 28 months interest-free. The deals are now even more favourable than they were before the credit crunch.
In the purchases market, interest-free periods are shorter, but still impressive - with up to 18 months before you need to pay the money back.
CatchesTypically there have been a few things to watch for in the heat of competition. First, the interest rates these deals revert to after the interest-free period have been slowly creeping up. If you take advantage, therefore, you need a watertight plan for how you will repay your debts within the period.
Finally, these generous deals have come at the cost of a fee. The Barclaycard deal, for example, charges 3.5% to switch your money over.
DevelopmentHowever, very recently, the market has made a change here too - with a number of providers offering to refund a portion of this fee.
When Halifax increased its 0% balance transfer period from 25 months to 27 months (plus interest-free purchases for the first three months) it retained its 3% fee. But it also offered a refund on the fee (credited to the account within a few weeks) which brings the cost down to 1%.
Lloyds, meanwhile, offers 24 month zero interest balance transfer, with a 3% fee. However, it has offered a 1.5% refund within 60 days of the balance transfer completion date - bringing the charge down to 1.5%
Bank of Scotland is also offering a balance transfer fee refund on its 24 month 0% interest fee platinum credit card – which again drops the fee to 1.5% from the normal 3%.
Gocompare.com's credit card expert, Matt Sanders, said: "Customers have usually been attracted to the longer 0% interest periods, but it seems that they are now switched onto the savings they could make by getting a reduced balance transfer fee. These fee refunds mean that a card holder that transfers a balance of around £500 will only pay around £5 to £7.50 in transfer fees to the new card provider, and will still have about 15 months to pay off the balance."
This takes a major sting out of the tail of transferring balances, and makes it a worthwhile consideration for anyone trying to spread their repayments over two years without paying interest.
However, as Sanders warns: "As always with credit cards, it's important to consider your repayment plan, as if you don't clear the balance within the 0% period, there will be interest payable on the outstanding balance. Also, always pay at least the minimum repayment as providers will often remove any special 0% introductory offers if you fail to do this."