May 16, 2006

By Peter Kenny

The Abbey has followed the lead of Egg and Mint by removing the fee cap on balance transfers to their credit card.

Previously with the balance transfer fee cap, the maximum charge for transferring a balance to an Abbey card would have been £49, no matter the size of balance.  Now with the fee cap removed the costs could rise considerably.

The balance transfer fee is currently 2 per cent of the balance you wish to transfer. If a customer had a balance of £5000 to transfer, the balance transfer fee would now be £100 instead of £49 before.

This move by Abbey is in direct response to the many consumers who use a 0% introductory offers, and once the deal is over, then swap their balance to another credit card with another introductory 0% balance transfer offer. Credit card companies do not make any profits on these introductory offers and they are becoming increasingly aware of this trend.

The current Abbey credit card comes with an APR of 15.9 per cent and a 0% balance transfer offer of 9 months from the account opening.

One thing to remember about the Abbey card is their allocation of payments process; they will pay off items of lower interest first. What this means is if someone transferred a balance and made any purchases on their credit card, any payments they made to their account would be allocated to the balance at 0% first. Meanwhile the purchase they made would be incurring interest at 15.9% APR.

Click here for more details on the Abbey credit card

Alternatively, we recently reported on a new credit card from GE Money, which still had a balance transfer fee cap. Click here for more details New Credit Card From GE Money