April 22, 2006

By Peter Kenny

The World Wide Web has many faults, however, one of the main benefits has been the ability for consumers to search for better deals, easily and in the comfort of their own home. When market forces create competition, suppliers in order to survive have to make sure their product is as attractive as possible. This scenario is currently being played out in the UK credit card industry.

Life before the internet meant that consumers had to do a great amount of legwork to find the best credit card deal that suited them. These days it is very simple to visit some of the many comparison sites that have sprung up, enter some details and find a credit card that suits your finances.

This increased use of the internet as a means to source a credit card has forced banks and credit card companies to improve their in order to get custom. A couple of years ago banks and credit card companies went over the top in some of their offers. These offers included 0% balance transfers for extended periods of time, ranging up to 15 months. Whenever a bank or credit card company offers a 0% deal, it means they are not making any profit on that credit card until the introductory deal runs out. The amount and size of the 0% balance transfer deals meant that the banks and credit card companies could not sustain them for too long. In the last 6 months we have seen a gradual reduction in some of these 0% offers, although some still exist like Capital One and Halifax One Visa.

Credit card companies are now reducing their 0% credit card deals, however, they are now looking at the longer term benefits for consumers and are changing their to include lower APR’s, lifetime balance transfer offers and cheaper methods for the calculation of interest to an account.

This has enabled the consumer to be able to compare all their credit card options and apply these offers to their long-term needs, rather than a quick fix and more work when their short-term 0 per cent deal runs out.