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Credit card companies go refund crazy to catch more customers

12th August 2013 Print

The credit card conflict rages on, as Halifax, Bank of Scotland and Lloyds seek to attract more customers by offering balance transfer fee refunds and longer interest free periods.

Halifax was the first to make a move, by increasing its 0% balance transfer period from 25 months to 27 months, for a 3% fee. It also offers interest free purchases for the first three months. The interest rate on this card after the 27 month 0% interest period will typically be 18.9% for balance transfers and 18.95% on purchases.
 
Halifax has also slashed the fee on its all-in-one 15 month interest free card from 3% to 1%, by means of a refund. So, the 3% fee will be charged when a customer makes a balance transfer, but Halifax will refund two thirds of that with a credit into the card holder's account within 30 days of the balance transfer completion date.
 
The interest rate after the 15 month period will usually be 17.9 per cent on balance transfers and 17.95% on purchases.
 
Lloyds has also upped its game by offering similar deals to Halifax - its platinum 24 month zero interest balance transfer card has also slashed its 3% fee, by offering a 1.5% refund to the credit card customer's account within 60 days of the balance transfer completion date.
 
Its 15 month interest free balance transfer card has also cut its transfer fee to 1%, again by initially charging 3% and refunding 2% into the customer's account within 60 days.
 
Both Lloyds cards also offer 0% interest on purchases for the first three months, but the interest rate on both of the Lloyds cards will typically be 17.95% after the 0% period runs out.
 
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%. The card also offers an interest free period on purchases for three months, which increases to 17.95% after the introductory period has run out. Its typical balance transfer interest rate is 17.9%.
 
All of these cards give you 90 days to make balance transfers, as opposed to the usual 60 day limit usually offered by other credit card providers.
 
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 circa £5 to £7.50 in transfer fees to the new card provider, and will still have about 15 months to pay off the balance."
 
He added: "The longer 90-day deadline to make balance transfers may also be attractive to customers who are planning to use their credit card on holiday, and want to transfer that balance later.
 
"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."