Credit card promo offers at all time high

Consumers are benefiting from renewed competition in the credit card market as the length of interest-free promotional periods offered by credit card providers on balance transfer and purchase credit cards hits record highs, according to analysis from moneysupermarket.com. However, the downside of these changes is that rates are continuing to rise with the average rate hitting 17.32 per cent.

The average interest-free period across the top best buy credit cards for balance transfer cards hit a high of 15.4 months, nearly three months longer than the average in July 2007 (12.8 months). The Platinum Credit Cards from NatWest and Royal Bank of Scotland are the market-leaders with 16-month zero per cent offers on balance transfers and a 2.9 per cent transfer fee. These cards are closely followed by offerings from Yorkshire Bank and Clydesdale Bank which offer near identical deals, albeit with a 3 per cent transfer fee.

For people who are looking to use a card for purchases, the average period for zero per cent purchase cards has now risen to an average of 12.2 months, far higher than the average rate in July 2007 (10.8 months). Tesco's recently launched ClubCard Credit Card offers a market-leading 13 months interest-free on purchases and a raft of additional benefits for customers.

Kevin Mountford, head of banking at moneysupermarket.com said: "An interest-free balance transfer card or purchase card can be a great option for people with existing debt who need flexibility, or for those who have a big purchase coming up and need some extra time to pay it off.

"Our analysis shows there is renewed appetite among credit card providers to offer great deals and consumers should take advantage.

"However, there is a sting in the tail. While interest-free periods may be getting longer, the rates of interest being charged once they end are also increasing. The average annual percentage rate hit 17.32 per cent in July, up from 17.19 per cent in May.

"This makes it even more important to ensure you pay your balance off before the interest-free period ends. You also need to make sure you aren't late making a repayment. If you are, or if you miss one completely, not only will you be hit with a late fee, you'll probably forfeit the zero per cent offer and start being charged interest."