Credit card balance transfer market alive and kicking
Andrew Hagger of moneynet.co.uk looks at the 0% credit card balance transfer market in light of the new 16 month best buy deal launched by Yorkshire/Clydesdale Bank today.
Credit card providers have been through a couple of years that they would probably prefer to forget, not only having to deal with a surge in bad debts as the recession took hold but also coming under increasing pressure from the government to offer customers a fairer deal.
Not surprisingly, the market was much quieter in 2009 with fewer new products being launched, and many of us wondered if the 0% balance transfer deal was on its way out.
New research from Moneynet today reveals this not to be the case and in fact the number of interest free deals is virtually back to the levels seen in the summer of 2008.
Two years ago there were 80 0% balance transfer card on the market of which 39 were for a term of 12 months or more, however in the midst of the economic down turn one year later, the number of 0% cards plummeted to just 52 with only 24 being for one year plus.
Today there's a choice of 71 deals offering you the chance to switch to a 0% card with 39 for 12 months or more, so the appetite for new business has certainly perked up.
The market leading 16 month 0% deal from Yorkshire Bank and Clydesdale Bank launched today is another example of this increased desire to attract new customers.
The one off transfer fee with this card is in line with the majority of the market at 3% and once the introductory period expires the interest rate reverts to a respectable 16.9% APR.
Whilst it's good to see new products being launched and availability back up to 2008 levels, lenders will still be operating very tight credit scoring strategies.
If your credit record is squeaky clean then the garden looks quite rosy although the size of the credit limit you'll be offered is likely to be much smaller than you'd have seen a couple of years back.
If your credit rating is tarnished then the experience is likely to be less positive and you may find your application for market leading introductory offers declined or that you'll be offered plastic but with a higher than standard rate of interest.
Whilst lenders still want new business and some ‘rate tarts' are still looking to switch their balance on a frequent basis, the goalposts have undoubtedly moved and a greater proportion of consumers will see their application turned down.