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Nationwide launches lowest-ever fee 0% balance transfer card

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20/02/2014
A new balance transfer price war could be on the cards after Nationwide Building Society launched a 0% deal with the lowest fee on record for long term borrowing.

The card offers 26 months at 0% on balance transfers, but has a balance transfer fee of just 0.75%. The average balance transfer fee on the top ten balance transfer credit cards is currently 2.84%. For someone borrowing £3,000, the difference in the fee would be £62.70.

Credit card providers have been stepping up their efforts to win new customers lately by launching deals focusing on the length of the 0% promotional period. But according to MoneySuperMarket, there have only been some minor adjustments to balance transfer fees.

Nationwide’s move is the first time a credit card provider has significantly reduced the balance transfer fees.

John Crossley, Nationwide’s head of credit cards and personal loans, said: “There are a lot of credit card deals out there at the moment that look appealing on the outside but in fact you could end up worse off if you don’t take into consideration other factors such as the balance transfer fee and the interest you pay on balances after the offers run out.

“Deals with the longest interest free periods often charge higher fees, some as high as 3% on any balance transferred. This could work out as a sizeable charge if you transfer a significant balance.”

Kevin Mountford, head of banking at MoneySuperMarket, said this deal could trigger a balance transfer fee price war.

“Prior to this launch, the low fee balance transfer cards tended to offer short term promotional offers, typically over 12 months,” he said.

“Although this card’s promotional rate is five months shorter than the current market leading credit card, if you set your monthly repayment to more than 2.5% of the original balance, for example £75 per month on a £3,000 balance, then the total cost of borrowing would be cheaper than on the longest 0% card, even if you borrowed over the same period,” he added.

 Best Transfer Cards

Provider Introductory Rate Duration BT Fee Representative APR Total Interest + BT Fee
Nationwide BS credit card 0% 26 Months 0.75% 17.90% £36.88
MBNA Platinum Credit Card 0% 29 Months 2.89% 18.90% £88.17
Tesco Clubcard Credit Card 0% 29 Months 2.90% 18.90% £88.47
Barclaycard Platinum Credit Card with Extended Balance Transfer 0% 31 Months 2.99% 18.90% £89.70
Halifax Balance Transfer Credit Card 0% 30 Months 3.00% 18.90% £90.00
Santander Long Term Balance Transfer Credit Card 0% 29 Months 3.00% 18.90% £91.47

 

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