The longest balance transfer deals do not always provide best value

23 August 2013

Latest research from Nationwide Building Society has shown that switching to the longest balance transfer deals in the market does not currently provide credit card customers with the best value, as higher balance transfer fees reduce the benefit.

The average balance transfer amount is £2,091¹. If customers transfer this amount and want to repay the debt within the interest free period then the only charge will be the balance transfer (BT) fee. By transferring to Nationwide, which makes no interest charges for 26 months (subject to a 2.40% BT fee, minimum £5) they could save up to £23 (see table below).

Even those customers who need longer to pay would benefit by switching to Nationwide as the 15.9% APR representative on the Select Credit Card² (available to main current account customers) is lower than those offered by the majority of other cards on the market. Those without a Nationwide current account can still benefit as the Nationwide Credit Card charges a competitive representative APR of 17.9%.

Paul Carvell, Nationwide’s head of credit cards, said: “Often when customers compare balance transfers they just look at the deal period but, by neglecting to take into consideration the balance transfer fee, they could end up worse off.

“For those that repay in the interest free period the only charge is the balance transfer fee, but the deals with the longest interest free periods often charge higher fees, some as high as 3.50% on any balance transferred. This could work out as a sizeable charge if you transfer a significant balance.

“Nationwide’s credit cards make no interest charges on balance transfers for 26 months. However, with just a 2.40% fee, our deals could work out as better value than those with longer interest free periods.”

How Nationwide compares:

Card provider Length of BT deal BT fee Representative APR Total cost (interest and BT fee) Potential saving with Nationwide
Nationwide (Select) 26 2.40% 15.9% £50.18 N/A
Nationwide (Credit Card) 26 2.40% 17.9% £50.18 N/A
Halifax (Balance Transfer Credit Card) 27 2.70% 18.9% £56.46 £6.27
(Platinum 27 month Balance Transfer)
27 2.99% 18.9% £62.52 £12.34
Virgin 26 2.99% 17.9% £62.52 £12.34
(Platinum BT Credit Card)
27 3.10% 18.9% £64.82 £14.64
Tesco Bank
(Clubcard Credit Card for BT)
27 3.15% 16.9% £65.87 £15.68
(Platinum 28 month Balance Transfer)
28 3.50% 18.9% £73.19 £23.00

Source: Competitor websites - 21.8.13
Figures assume a balance transfer of £2,091 repaying £84 per month in order to repay in the intro period

Notes to Editors:

This balance transfer offer is available to new account openings where the customer has not held a Nationwide credit card for at least the past year. The rate will apply from the date the account is opened. Balance transfers at 0% must be made within three months from account opening and are subject to a fee of 2.4% (minimum £5). If you already hold a Nationwide credit card or have closed one in the last 12 months you will not be eligible for these offers.

New Select Credit Card customers will pay no interest on new purchases for the first 12 months, while new Nationwide Credit Card customers will pay no interest on new purchases for the first three months.

¹ Average of the top ten credit card providers within the eBenchermarkers peer group – April 2013.

² The Select Credit Card is available to any members who:

a. Hold a FlexAccount with a Visa debit card (not cash card or cash card+) and:

  • Have been paying in £750+ a month (excluding internal transfers) for the last three months; or
  • Complete an account transfer to us (from a non Nationwide account) using our Account Transfer Service or have done so in the last 4 months; or

b. Hold a FlexDirect or FlexPlus account

Nationwide credit cards are available to those aged 18+ and are subject to circumstances.
Nationwide subscribes to the Lending Code.

Representative example – Nationwide Credit Card

17.9% APR representative (variable). Based on an assumed credit limit of £1,200 and a purchase rate of 17.9% p.a. (variable).

Representative example – Select Credit Card
15.9% APR representative (variable). Based on an assumed credit limit of £1,200 and a purchase rate of 15.9% p.a. (variable).

About Nationwide Building Society
Nationwide is the world's largest building society as well as one of the largest savings providers and a top-three provider of mortgages in the UK. It is also a major provider of current accounts, credit cards, ISAs and personal loans. Nationwide has around 15 million members.

Customers can manage their finances in-branch, on the telephone, internet and post. The Society has around 15,000 employees. Nationwide's head office is in Swindon with administration centres based in Northampton, Bournemouth and Dunfermline. The Society also has a number of call centres across the UK.

Please note: If you are a customer looking for information on our products and services, please visit the main website.