How 0 per cent balance transfer credit cards have changed

The ever increasing debt levels in the UK mean that getting a credit card is becoming more difficult as time goes by. Getting a credit card with a good balance transfer deal is becoming even more difficult as lenders tighten up their lending criteria.

It happened to me a few months ago; I was looking into transferring a balance from my existing credit card to another. On applying by telephone with the new credit card company they told me that I could transfer a balance but it was only around 75% of the total balance I was looking to transfer. This was obviously not really any good for me because I didn’t want to end up splitting the balance transfer over 2 new credit cards because it would cost me 2 balance transfer handling fees and also because it just seemed like untidy financial management to me. So I looked elsewhere and on applying with another card company they were happy to transfer the entire balance from my other credit card.

Over the last few years the balance transfer deals have got better in one respect because the 0% offers now top 12 months, I think the best is around 15 months at 0% when transferring a balance. However in another respect the introduction of balance transfer handling fees combined with the reluctance to let customers almost automatically transfer any balance amount to a new credit card, means that these deals aren’t what they used to be.

Of course you couldn’t really expect the credit card companies to let people transfer balances from card to card with no charge, forever. Back in 2004 this is how it was! Often referred to now as ‘rate tarts, customers could simply transfer their existing credit card balance to a new company with no charge and benefit from 0% interest on the balance transferred for months on end. Then when the 0% period came to an end they simply went through the same process. I think it was something like 2 or 3 years, certainly late 2006 or early 2007 before the credit card companies started their balance transfer handling fee charges.

Now credit card companies are tempting new customers with low APRs for the life of the balance transferred. The idea is a low APR like 5 to 6% Typical, for the life of any balances you transfer, is reasonable compared to the average UK credit card APR of 16%. Also it makes life easier for customers who do not want to keep switching their credit card every year or more often.