Many of the lenders who take part in the UK’s credit card market are engaged in a pitched price war. This war has been slowly but fiercely waging for several years now, though has arguably now stepped up a notch and looks set to continue for a while yet. This will most likely mean a mixture of good and bad news for consumers.
The weapon of choice in this war is the interest-free introductory period, with providers offering longer and longer 0% deals to try and attract the biggest share of the customer market. This means that customers are finding they potentially have access to better and better deals for interest-free spending or 0% balance transfer (make sure you know the difference if you intend to apply for a 0% card).
This trend is particularly strong with balance transfer cards. Indeed, six of the UK’s major credit card providers currently offer balance transfer cards which will remain interest-free for a full three years. This means that those with existing credit card balances they wish to transfer in order to avoid interest will benefit from a full three years to clear the balance without having to transfer again.
However, despite the apparent keenness of credit card providers to offer deals that will tempt in new customers, these packages do not come without catches. Balance transfer cards may offer you a nice, long period to clear your balance without paying interest but this is offset somewhat by the fees that must be paid at the point of transfer. These are generally higher for cards that offer longer 0% periods, and tend to be around 2-3% of the balance you are moving over. Those who have fairly large credit card debts they are now trying to clear could find these fees quite heavy, and if you expect to clear your balance in one or two years then you might still get a better deal with a card that offers a shorter period.
Another catch is that while lenders are keen to attract customers to their deals as opposed to the offerings of the competition, they are still fairly cautious about who those customers might be. Lenders are reluctant to offer good deals to those with blemishes on their credit history. The better the deal, the pickier lenders are about those blemishes. While the price war that lenders are currently engaged in has caused some very good deals to enter the market, the very best ones might reject you for things as simple as a missed bill payment, and this rejection can then be seen by other lenders as a further mark on your record.