According to the new study by The Co-operative Bank which polled 2,003 respondents, it calculated that 25% of the 15.6 million Brits who have taken advantage of a zero percent balance transfer credit card in the last five years have fallen foul of the terms of the offer.

Typically, balance transfer credit card terms and conditions include the right to remove the zero per cent promotional offer if a customer makes a late payment, misses a payment or goes over their credit limit.

The bank says that as a result of this practice, it has collectively cost UK cardholders up to £1.2bn in annual interest as the card reverts back to its standard APR.

Its research also shows that these mistakes are relatively common with 29% of credit cardholders with a balance transfer promotional offer admitting to making them.

On average consumers who make a mistake lose the zero per cent offer just four months into the deal, but 22% of these cardholders did not even experience one month of zero per cent interest as the promotion was withdrawn.

The Co-operative says this has led 41% to take out a loan to meet their repayments while 38% dipped into their savings and 38% turned to their overdraft.

New balance transfer credit card from The Co-op

Taking account of its research and feedback received from its customers, The Co-Operative has created a new balance transfer credit card which is “different to most others on the market”.

The new card won’t penalise customers for “minor errors” so if users find that they’ve missed a payment, make a late payment or exceed their credit limit, the ethical provider says it won’t remove the promotional zero percent rate.

Yourmoney.com asked what The Co-op considers as a “minor error” and it told us there’s no limit on the number of times customers can miss a payment, pay late or exceed their limit, but they will incur a £12 fee each time this happens.

Here are the details of the card:

• 0 % APR (typical) on balance transfers for 24 months
• A balance transfer fee of 1%
• 0% APR on purchases for four months
• Standard rate of 18% APR applies after the promotional period
• £12 late payment fees apply.

‘We all make mistakes’

Matthew Carter, products and marketing director at The Co-operative Bank, said: “With many cardholders only keeping the promotional offer for a matter of months, despite paying an initial fee for the benefit, our card should enable customers to utilise their zero per cent rate for as long as possible and not lose out because of minor errors.

“We all make mistakes, but our customers told us that while they expect to be charged a small fee, what they don’t like is disproportionate penalties that unfairly hit them financially, so we designed this card to be different from many others on the market.

“A balance transfer credit card is an effective way to manage debt and cut the cost of borrowing by consolidating outstanding credit balances into one repayment, yet, our study shows that many cardholders never really benefit from these headline promotions as small mistakes prove costly.”

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