15 Month Balance Transfer Card to Make Comeback

Hard pressed ‘rate tarts’ received welcomed news when Capital One announced it’s to launch a 15-month interest-free balance transfer credit card.

The platinum card offers a market-busting offer of 0% interest on balance transfers until August 2007. However, an uncapped fee of 2% will be levied for the transaction.

Although the fee may be uncapped, the length of the offer (nearly three times the market average) more than compensates for this.

The launch of Capital One’s platinum card is particular good news for those with large credit card balances they wish to transfer, as they the fifteen months should ensure they clear their balances.

The length of the offer may also lead to consumers who are contemplating transferring large balances to cards offering low APR’s for the lifetime of the balance, to think again. Currently, many consumers who have balances that are unlikely to paid off before the 0% offer expires are opting for cards that offer typical interest of 5% for the lifetime of the balance.

The card’s re-launch goes against the market trend as the length of balance transfer deals offered by many card issuers shortens. Research carried out by financial data firm Moneyfacts, reveals that just three providers currently offer interest free deals of between ten and twelve months. The majority of card providers offer six-month interest free deals, with 15% offering nine-month deals.

According to moneyfacts the decline in 0% interest free balance transfer deals is not the only the only thing making life difficult for UK card users. “We have seen more providers introduce a fee for balance transfers, with many of these fees moving from being capped to uncapped,” said a spokesman for moneyfacts.

“We have also seen some of the related benefits, such as cashback or free insurance products, disappear as lenders try and make money from their cards.” Many UK card providers have saw profits squeezed as ‘rate tarts’ exploited offers, such as interest free balance transfers, to the full. As a result, many providers have implemented new measures designed to arrest the decline in profits, such as shorter deals and fees for balance transfers.

The Capital One card has a typical APR of 15.9% and three months’ interest-free credit on purchases. Capital One’s Justin Basini said, “An interest-free period is one of the main attractions of a credit card balance transfer offer, but the majority of these last for only six months or less.”

Alisdair Milton
12/4/06

 

Like this news story? Grab our RSS credit card news feed updated on a daily basis.