Credit card promotional offers up year-on-year

Anyone looking for a credit card this January is set to benefit from greater competition in the market with the length of promotional rates on balance transfers and purchases at an all time high, according to analysis by moneysupermarket.com.

moneysupermarket.com compared the current deals available on the top credit cards to those offered in January 2010. Although the length of promotional rates has increased, the average standard rate on credit cards has increased by 0.85 per cent in the same period while the rate for cash advances has risen by 1.27 per cent. On a £2,500 balance, the increase in standard rate would add £18.02 to the cost of credit once the promotional rate ends.

The current average promotional length for balance transfers currently stands at 16.2 months, an increase of one month compared to January 2010 (15.2 months). The average length of purchase card promotional rate is 11.8 months compared to 10.6 months this time last year.

Kevin Mountford, head of banking at moneysupermarket.com, said: "There is no doubt that the appetite for lenders to attract new credit card customers has increased in 2011 with a number of providers introducing new deals, including Barclaycard who introduced the first 17 month BT card recently, and NatWest offering 13 months on BT's and purchases. Although this is great news for anyone looking to consolidate their debts in the New Year or make a big purchase, once your promotional period ends, you will be paying more in interest than last year.

"Anyone transferring a debt on to a balance transfer card should aim to pay off that debt before the promotional rate expires otherwise you will be hit by much higher interest charges, likewise if you are using a purchase card to take advantage of the zero per cent offer.

"Although the majority of credit card providers have switched to a positive order of repayments, meaning the cheapest debt is paid off first, anyone tempted to use their card for cash advances should think again. We have seen average cash advance rates increase which makes this form of borrowing even more expensive, and although you are now able to pay these transactions off quickly, it is still an expensive way to borrow."