Is this the best ever credit card?

20th February 2014

A credit card balance transfer price war is on the table as Nationwide has thrown down the gauntlet by launching a 0% deal which has the lowest fee on record for long term borrowing, making it the cheapest option for many people looking to shift their debts.

The move is likely to trigger a balance transfer fee price battle as other providers respond, predicts comparison site MoneySuperMarket.

The card offers 26 months at 0% on balance transfers but carries a balance transfer fee of just 0.75%. The average balance transfer fee on the top 10 balance transfer credit cards is currently 2.84%. For someone borrowing £3,000, the difference in the fee would be £62.70.

Balance Transfer Cards – Total cost of borrowing based on monthly payment of £100* on a balance of £3,000 over 31 months. Ordered by total interest plus BT fee

Provider Introductory Rate Duration BT Fee Representative APR Total Interest + BT Fee
Nationwide BSCredit Card 0% 26 Months 0.75% 17.90% £36.88
MBNAPlatinum Credit Card 0% 29 Months 2.89% 18.90% £88.17
TescoClubcard Credit Card 0% 29 Months 2.90% 18.90% £88.47
BarclaycardPlatinum Credit Card with Extended Balance Transfer 0% 31 Months 2.99% 18.90% £89.70
HalifaxBalance Transfer Credit Card 0% 30 Months 3.00% 18.90% £90.00
SantanderLong Term Balance Transfer Credit Card 0% 29 Months 3.00% 18.90% £91.47

Source: MoneySuperMarket

Kevin Mountford, head of banking at MoneySuperMarket says: “While the balance transfer market has been extremely competitive over the past few years, most of the deals tended to focus on the length of the 0% promotional period, with 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 and means some of the rules about picking the best balance transfer card no longer apply as in many instances a card with a shorter promotional period but a very low fee will be cheaper.

“This could trigger a balance transfer fee price war which is great news for anyone looking to borrow as it means the cost of borrowing is falling. Prior to this launch, the low fee balance transfer cards tended to offer short term promotional offers, typically over 12 months.”

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 explains Mountford.

The offer is available until 31 March 2014 on Nationwide Building Societies Select Credit Card, available only to FlexAccount customers, and on its Standard Credit Card available to all customers.

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