uSwitch.com: Mint, NatWest and RBS new credit card deals

Following Mint, NatWest and the Royal Bank of Scotland’s introduction of a new 13 month 0% APR credit card deal for balance transfers, Mike Naylor, Personal Finance Expert at independent price comparison and switching service uSwitch.com, warns consumers - these offerings may not be as attractive as they first seem:

“We have recently seen an increase in the number of credit card providers offering long 0% balance transfer deals (up to 13 months) coupled with much shorter 0% new purchase deals (from three months). This is a very a easy way for providers to ensure consumers incur interest on all purchases made at the end of the three month 0% period for the remainder of the balance transfer deal. The new deals that have been launched over the past couple of weeks from RBS, NatWest and Mint are no exception to this trend.

“However, Mint’s new offering of interest-free balance transfers until August 1st 2008 and 0% on purchases until January 1st 2008 is one of the longest available for both facilities. This, coupled with one of the first reduced balance transfer fee’s we have seen from 2.9% to just 2.5%, makes this a pretty good deal. NatWest and RBS are offering new customers a 13-month interest-free period for balance transfers and three months interest-free on new purchases with a below average balance transfer fee of just 2% which is great. When it comes to the typical APR, NatWest and RBS offer a typical rate of 13.9% APR – 1% cheaper than Mint's at 14.9%.

“Customers who hold either a NatWest Advantage Gold, RBS Royalties, RBS Royalties Gold or RBS Royalties Premier current account package at the bank enjoy an even better rate of 12.9% APR. However, this should be weighed up against the cost of holding a packaged account and a review of all the ‘perks’ a consumer may utilise.

“Whilst any deal that offers consumers 0% on balance transfers for 13 months should be commended, these deals do need to be treated with caution for anyone considering using them for purchases. Due to the ‘order of repayments’ these providers operate, it means that some consumers could find a nasty sting in the deal if they are not careful.

“If a balance is transferred and purchases are made as well, the interest charged on these new purchases after the three month 0% deal expires will wipe out the interest saved on the balance transferred. For example, a 13 month NatWest 0% balance transfer deal on the average balance transfer of £1,812 should have saved the consumer around £236.32 in interest. However, due to the order of repayments, purchases of £3,000 would end up costing £343.68 in interest and will completely wipe out the interest saved on the 0% balance transfer. It makes much more sense to use two cards - one for balance transfers and one for new purchases. For example HSBC has just launched a 12 month 0% deal for new purchases and Barclaycard offers a 13 month 0% deal for balance transfers.

Naylor concludes: “Consumers need to make sure they always shop around to ensure they get the right deal for their individual needs. The days of a ‘one credit card fits all deal’ are over and people must ensure they use each of their credit cards for the right purpose or by having more than one if necessary. Getting the right card could save £226.32 in interest on the average balance transfer alone so it’s definitely worth doing.”