Competition in the credit card market intensified this week with the launch of a new record zero per cent balance transfer deal.
Barclaycard is offering new customers 0 per cent interest on debt they switch from other cards for 20 months – the longest period for which one of the deals has ever been available.
The new offer came just hours after two other providers, MBNA and Virgin Money, announced that they were offering 0 per cent deals of 18 months, the length of time Barclaycard had previously offered.
But these groups have lower balance transfer fees, meaning they knocked Barclaycard off the top slot in the best buy tables before it announced its new 20-month deal.
The length of time that 0 per cent interest balance transfers are available for has been steadily rising as providers battle for market share.
Financial website moneysupermarket.com said the average length of 0 per cent interest balance transfer deals on the top five credit cards was now 17.8 months, up from 15.2 months in March last year, and the highest level ever recorded.
Kevin Mountford, head of banking at moneysupermarket.com, said: “In February, we saw providers launch a number of attractive credit card deals which well and truly showed their appetite to lend has returned.
“However, Barclaycard has taken this competition to a new level with the launch of the UK’s first 20-month balance transfer card.
“I wouldn’t be surprised to see other lenders react accordingly by launching similar deals, but with so many vying to go top of the best buy tables, we could see even longer deals emerge.”
The move is good news for consumers as commentators had warned that new credit card regulations, which came into force at the beginning of this year, could signal the end of the balance transfer market.
But moneysupermarket warned people to pay close attention to the balance transfer fees they would have to pay.
The Barclaycard deal comes with a 3.2 per cent fee, although there is a 25 per cent discount for people transferring debt from more than one credit card.
MBNA and Virgin Money both have lower balance transfer fees at 2.88 per cent and 2.89 per cent respectively.
Michael Ossei, lending expert at uSwitch.com, said: “Barclaycard was clearly not happy after seeing its card fall down the best buy table.
“It has come out fighting within less than 24 hours with the best deal the market has ever seen. This is great news for consumers looking to get existing debts under control.”