0% deals are slipping away

Long-term 0% deals and fee-free 0% deals are on the decline.

New research on credit cards last week made for some grim reading.

While it did suggest that the number of balance-transfer deals with no fees are rising, unfortunately, it didn't mean 0% balance transfer deals, because there are currently no cards that are both interest free and fee free on transfers. The last to offer this was the Abbey Zero card, but that deal has been changed for new applicants.

The disappearing cards

The research also found that the number of deals lasting at least 12 months has fallen considerably. I keep track of deals lasting more than 12 months and my findings correlate with theirs.

Back in 2007, I found that there were just five cards offering deals over 12 months. Last year there were 14. This year we've lost half of them. That still leaves seven to choose from though, right? Actually, it's not that simple.

Take a look at this table:

All 0% balance transfer deals lasting more than 12 months

All the cards charge a fee of 3%. (Or 2.98%, but let's not quibble about 200ths of a percent!) I've excluded exclusive deals. I've not included the typical APRs in the table, because they're all so high you should never consider paying it. Beware that it's easy to be tricked into paying APR, as I explained in this piece.

Some of the providers above offer more than one card, but I amalgamated those, because I don't consider them to be genuine separate offers.

You are probably wondering what my column headed 'Group' is all about. If you recall, I hinted earlier that you don't actually have seven cards to choose from - in fact you only have have four to choose from.

This is because many cards are connected, which I have indicated by giving the cards a group. You can't take out a second card from any cards in the same group until you've cleared the balance and closed the card for a time, usually six months to two years.

The Virgin and BT cards are both provided by MBNA, so those two, along with the MBNA card itself, are all in group A. Halifax and Bank of Scotland are part of the same banking group, so both their cards are in group B. Nationwide and Abbey are not connected to any cards in the table.

There is no point applying for a card in the same group if you already have a card in it. MBNA is the biggest problem in the UK, as it provides many cards to different institutions, so check out your small print to see who really provides your card.

Why are these deals declining?

These deals are great at sucking people in and we usually end up falling for one of the many costly catches, or simply being too lazy to switch our card deals at the end.

However, lenders are becoming less inclined to lend a load of money for almost nothing up front, as they need to make every penny that they lend work for them during these uncertain times.

It'll be more than a year before good deals pick up significantly, I should think.

Alternatives to these cards

If you've run out of groups, your first port of call could be your own bank, and it's not often I say that.

Usually I'd rather suggest you go to your bank to buy a poisonous snake than to buy a financial product. However, in this unusual case of rewarding loyalty, banks are offering more and more good deals to existing customers only.

If you want a 0% deal over 12 months, there are a few banks that will give it to loyal customers, including Royal Bank of Scotland, NatWest and HSBC. Royal Bank of Scotland and NatWest would be group C if they had made it into my table.

Flexible loans through credit cards

A new development I'm noticing is that a few cards offered by MBNA are beginning to offer to transfer money at 0% to your current account for a fee of 4%. Effectively, you're being offered a flexible, short-term loan, with a hefty penalty if you go over the length of the 0% deal when it reverts to a massive APR.

Don't be conned by the seemingly small 4% fee. If you're not careful this could translate into the equivalent of 8% or 15% interest! Read this article for more.

More: Why the worst credit cards just got worse! | 0% cards have the most catches