Yorkshire Bank leads way with credit card deal

Clydesdale Bank and Yorkshire Bank, both part of National Australia Bank, are offering 0 per cent interest on balance transfers for 16 months, as well as 0 per cent interest on all purchases for the first three months.

The deal puts the card at the top of the best buy tables, beating Virgin Money's offer of 0 per cent interest for 14 months.

The launch of the card is a further sign that compe-tition in the credit card mar-ket is continuing to hot up.

Credit card providers have endured a difficult time during the past two years, due to a combination of the credit crunch, rising bad debts and increasing pressure from the Government to treat customers fairly.

Unsurprisingly, as their margins came under pressure, there was a sharp fall in the number of 0 per cent balance transfer deals on offer.

In 2008 there were 80 different 0 per cent balance transfer deals on the market, half of which were for periods of 12 months or more, according to financial website moneynet. co.uk.

But by last year, the number of different 0 per cent interest cards had fallen to just 52, only 24 of which were for at least a year.

However, in the past year, the number of different 0 per cent interest deals has nearly returned to its 2008 level, at 71, 39 of which are for 12 months or more. Peter Harrison, credit cards expert at moneysupermarket. com, said: "Yorkshire and Clydesdale banks have not traditionally been proactive players in the credit card best buy tables, so to see them make such a bold move is very pleasing.

"There has been concern that forthcoming changes to the credit card market would have a negative impact on the balance transfer market with some of the leading players reducing their offers recently.

"This product launch is a good sign that providers remain keen to compete strongly in the credit cards arena."

But Andrew Hagger, of moneynet.co.uk, warned that only people with top credit scores were likely to qualify for the new card.

He said: "Whilst it's good to see new products being launched and availability back up to 2008 levels, lenders will still be operating very tight credit scoring strategies.

"If your credit record is squeaky clean then the garden looks quite rosy although the size of the credit limit you'll be offered is likely to be much smaller than you'd have seen a couple of years back.

"If your credit rating is tarnished then the experience is likely to be less positive and you may find your application for market leading introductory offers declined or that you'll be offered plastic but with a higher than standard rate of interest."

The Clydesdale Bank and Yorkshire Bank credit card charges a balance transfer fee of 3 per cent, with interest typically reverting to 16.9 per cent at the end of the 0 per cent period.