August 17, 2006

The new credit card offering from HSBC, offering zero per cent interest on balance transfers for 12 months, has been described as a "relief to those remaining 'rate tarts'" by Nick White, head of personal finance at price comparison website uSwitch.com.

According to Mr White, this is because recent months have seen many providers cutting their interest-free periods or increasing associated fees.

The HSBC card is now one of five products on the market to offer a 12-month interest-free balance transfer deal, although it does include a capped fee of two per cent.

Mr White points out that it would be expensive to use this card for new purchases, owing to rules which stipulate that cash advances, credit card cheques and purchases are paid off after any special offers.

This could mean that customers accrue interest at 15.9 per cent for purchases or 22.9 per cent on cash and cheques until the outstanding balance transfer is paid off.

Mr White advises: "The most cost effective way to manage credit card spending is to use an additional zero per cent card just for new purchases, as combined zero per cent deals do not offer such extensive interest free periods.

"The best deal available at the moment is from GE Money (12 months) and Sainsbury's Bank (ten months)."