What are balance transfer & purchase credit cards?


Balance tranbsfer and purchase card holders

As the introductory offer duration periods for traditional 0% balance transfer cards have increased over time, so their utility to certain customers has reduced. Many people understand that they do not need, or even want, 3 years in which to clear their debts. They are in a position to, and would be far happier, to pay off their credit card balance sooner. This has meant that whilst a reasonable period in which to pay of the balance is still high on their agenda when researching new cards, they are also in a position to explore and benefit from other features available to new applicants.

The most popular of these additional features is, unsurprisingly, the main feature of another of the UK's most popular credit card categories - 0% on credit card purchases. Creating the 'Balance Transfer & Purchase' credit card.

These "Balance Transfer & Purchase" cards (sometimes also described as 'combined cards' or 'dual-hook cards') have become ever more popular over the past 5 years, as issuers have competed to offer the 'best' product.

Starting with low 0% transfer & purchase rates of less than a year, the introductory periods available on these cards have steadily increased, broadly in line with the increased 0% periods offered on standard 0% balance transfer credit cards, so that the products which now top the credit card comparison tables are offering around 2 years at 0% for transfers and purchases.

Who are balance transfer & purchase cards available from?

Originally something of a niche product, balance transfer and purchase credit cards are now available from most of the UK's traditional prime credit card issuers, as well as a few new smaller credit card brands. Some cards also combine features of other card types (like supermarket reward points), so there is a great deal of choice available to applicants.

Don't most 0% transfer cards offer 0% purchases?

Although most standard 0% balance transfer cards offer their customers some level of introductory purchases, the periods available tend to be derisory (3 to 6 months) to the point that they offer the customer little real utility. If anything it could be argued that the 0% purchases available on transfer cards reduce the value of the main product feature, by offering a route whereby customers can accrue balances which would quickly be subject to the standard rate of interest.

Transfer & purchase card considerations

In the vast majority of cases 0% transfer and purchase cards offer customers one of the most straightforward ways of managing their credit card, as they enjoy 0% on transfers and purchases for an equal amount of time and don't have to worry about one or other element incurring a higher interest rate over the lifetime of the full introductory period.

However, in some instances, this is no longer the case. Transfer and purchase durations are not always equally matched, despite the fact that they are both relatively generous. In these instances the balance transfer period tends to be longer than the purchase period, but recently some issuers have confused matters further by offering different 0% introductory periods depending on when given purchases were made. (eg. 0% for 18 months on purchases made within 3 months of account opening, then 0% for 14 months on purchases made after 3 months - which is in effect 0% for 11 months, given that 3 months will have elapsed at the point the secondary offer becomes applicable).

In instances where introductory periods are not matched, it is advisable for customers to pay special care to ensure that they switch to another deal in good time, especially if they pay their minimum balance by direct debit - as it can quickly increase before they have noticed they are paying more. Setting a series of alerts on a smart phone can help with this.