Tesco sparks 0% credit card price war

The battle of the balance transfer cards continues, with Barclaycard launching a new 26-month interest-free credit card in response to a new 25-month deal from Tesco.

Borrowers can now transfer their existing credit card debt to another card and not pay any interest for 26 months.

This is thanks to a new 0 per cent balance transfer card from Barclaycard.

It offers cardholders 26-months interest free - the longest interest-free balance transfer period available in the UK. 

Here’s a look at how the new Barclaycard stacks up against nine other top balance transfer credit cards.

The move by Barclaycard follows Tesco increasing the 0 per cent period on its Clubcard credit card to 25 months.

This made Tesco the joint market-leader with the existing 25-month Barclaycard deal.

However, Barclaycard responded within a matter of hours by introducing its 26-month card, helping it regain its position at the top of the best-buy tables.

Last month Halifax sparked a similar credit-card price war after it raised the interest-free period on its balance-transfer card from 24 to 25 months, rivalling Barlcaycard’s 25-month deal at the time.

Balance transfer credit cards can be a good way for people with existing credit card debt to save money on interest payments, says Nerys Lewis, head of credit cards at Confused.com.

"If you have a balance of £3,000 accumulating interest at the average rate of 17.9 per cent APR and move your balance to the market-leading Barclaycard, you could save £838.65 in interest charges over 26 months.

"That’s after paying the balance transfer fee of 3.5 per cent and assuming you pay off 1 per cent of your balance plus any charges or fees, on time each month," she says.

However, Lewis is urging borrowers not to automatically go for the longest 0 per cent period possible without doing their sums first.

She adds: "You should start by looking at how big the balance you want to move is, and then work out how long it will take you to pay this off.

"If you can pay off your debt in less than 26 months you may benefit from a credit card with a shorter interest-free period as it could have a lower handling fee.

"For example, Barclaycard’s 25-month balance-transfer card has a handling fee of only 2.8 per cent compared with the 3.5 per cent fee on its 26-month card."

Before you apply for a credit card, it’s important to remember that the best balance transfer deals are generally reserved for people with a good credit profile.

With this in mind, Confused.com offers a Card Matcher service that can help you to judge whether your application for a credit card will be successful before you apply.

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