Credit card 0% intro purchase deals getting longer

Andrew Hagger of Moneycomms.co.uk looks at how the market has evolved for credit cards offering introductory interest free deals on purchase transactions.

Much is written about the 0% balance transfer market, but that’s not the only area where card companies are focussing and for customers looking to make a major purchase, the 0% purchase market is very active and offers plenty of choice.

The market has changed over the last five years with the longest interest free purchase card (Tesco) now offering 16 months at 0% whereas in 2007 the longest free period was 12 months.

Although the maximum and average interest free terms have increased, the interest rate you are charged when the promotional period ends has become far more expensive too.

The average rate when your 0% deal ended was 15.84% in 2007 now this has sot up by over 1.6% and stands at 17.45% today.

Five years ago there were 23 credit cards reverting to a go-to rate of below 15.9%, today this has fallen to just 4 cards.

If you pay your card off within the 0% term then the go-to rate isn’t an issue, but there will be many consumers who start out with such good intentions, but then find themselves paying up to19% APR on balances they haven’t managed to clear as expected.

The best post 0% purchase go-to rates at the moment come courtesy of The Saga Platinum Card (Over 50’s only), The Everyday Card from MBNA and the Advance Card from Lloyds TSB all offering a very attractive long term go to rate of just 11.9%APR.

It’s worth taking a bit of time when choosing a credit card, don’t just look at the length of the 0% deal, factor in what the go to rate will be if you don’t manage to clear your balance.

For example a £2000 balance at 18.9% APR will cost you £31.50 per month in interest charges whereas at 11.9% the cost is a more palatable £19.83.

For more information, visit moneycomms.co.uk.