Sainsbury’s Bank has launched a 42-month balance transfer credit card which offers the longest 0pc period ever seen on the market.
A 4pc fee is applied to balance transfers made in the first three months – this drops to 3pc afterwards. Each transfer will attract a minimum fee of £3.
Borrowers must have a Nectar card to apply for the Sainsbury’s card and their number must be given at application.
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Customers will earn two Nectar points for every £1 spent on the card in Sainsbury’s (including at its fuel stations) and one point for every £5 spent elsewhere. Customers must apply before October 31 to get the 0pc deal. Those who are accepted for the card will get the full 42-month period.
While this card will take its place at the top of the best-buy tables Andrew Hagger, founder of Moneycomms, the personal finance website, stressed that “longest is not always best”.
The 4pc fee is especially high and those who can afford to shave a month off their 0pc term could make significant savings.
Customers who make a balance transfer of £5,000 with the Sainsbury’s 42-month credit card would pay £200 on the debt. The same balance could be transferred with Virgin Money’s 41-month card for £164.50. Virgin’s card has a fee of 3.29pc.
MBNA’s new Nuba card could prove an even more attractive option. This 41-month card charges a higher 3.49pc fee, which is slightly higher than Virgin Money. However, MBNA gives Nuba customers a £20 Amazon gift card when they make a balance transfer of at least £1,000 within 60 days of opening their account.
Based on a £5,000 balance transfer, borrowers would have to pay £174.50. With the Amazon gift card this works out at £154.50 – £10 less than Virgin and more than £40 cheaper than the Sainsbury’s card.
Lloyds’ 40-month card charges a much lower fee than all of the above cards, at 2.39pc. Customers would pay £119.50 on a £5,000 balance transfer – £80.50 less than Sainsbury’s Bank customers.
Borrowers should note that Lloyds initially applies a 3pc charge to the transfer and then refunds 0.61pc within 60 days.
Mr Hagger said: “The 0pc balance transfer market war shows no signs of abating, but customers need to look beyond the term. With Sainsbury’s Bank hitting 42 months it’s likely that key players such as Halifax, MBNA and Virgin will follow this move.”
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