/ Money

We’ve got zero confidence in sneaky ‘0%’ credit card deals

Credit card close-up

When we asked people how much a ‘0%’ balance transfer would cost – close to 0% of them actually got it right. I’m not sure 100% confusion was what they were going for.

I always find choosing a credit card a bit of an ordeal. There are so many different things to weigh up: the perks, the rates, the time frames… the list goes on. It’s easy to get confused and the risks of making the wrong choice are high.

And it turns out I’m not alone. Our latest research for our Sneaky Fees and Charges campaign discovered that only one in 20 people understood the true cost of so-called ‘0%’ balance transfer deals. And seven in 10 wrongly thought the transfer was free, even though we showed them the fee.

We also asked people to pick the cheapest credit card deal for someone making a balance transfer. Only a third picked the correct card and another third picked a deal that would have cost them three times as much in fees.

Action from the financial regulator

With levels of understanding so low and the potential costs so high (customers pay around £334m a year in balance transfer fees) we want action on sneaky credit card deals.

That’s why we’re calling on the Financial Conduct Authority to step in and scrutinise these 0% balance transfer fees as part of its investigation into the credit card market. Ultimately we want the financial regulator to take action – one option could be to ban credit card firms from advertising deals as ‘0%’ when there’s still a fee to pay. Another could be to show the fee as a monetary sum rather than a percentage.

Balance transfer deals are of course really handy if you want to pay down debt, but if we can’t understand their true cost these deals could increase costs rather than reduce them.

Have you been caught out by a hidden credit card fee? Would you like to see the back of 0% balance transfer fees?


Although I have never used a balance transfer I do get offers from Barclaycard from time to time. These show the time the 0% will be applied, plus the % fee that is paid when making the transfer. I don’t see anything sneaky in their offer literature. I have looked at the links provided above but see none that point to specific “sneaky fees”. It would be useful if specific examples were given of where fees are concealed or misleading.

I agree. All seems fairly straightforward to me when I’ve looked at the deals.

I always go for cashback credit cards, but with Capital One stopping cashback, I’ve just moved to Barclaycard, literally 2 days ago, and they are very honest, they said “0% interest on balance transfers for 6 months with a 2.99% balance transfer fee (from account opening)”.

I see no problems with this, they told me the fee/charge, they are not trying to hide anything. If the consumer has missed it then the consumer is to blame, normally i would have a go at any bank, but truth be told Barclaycard really can’t make it anymore simple if they tried!

@Jane, I couldn’t see the research online that Which? has done “Only one in 20 consumers understand the true cost of 0% balance transfer credit card deals, according to new Which? research.” Could you give a link to the examples of misleading information and the results. Sorry if I’ve missed it.

The latest one came through my door today. The headline was 0% transfer interest on debts from any other card and 0% to transfer money to a current account. However… There was a 2 point something% fee for doing this. (I’ve shredded it so can’t check). So far so obvious in the letter, though, in my book that doesn’t make the transactions interest free. The catch, in the small print, and not so obvious, was the need to avoid missing a payment, (which can happen by accident) and, more seriously, the fact that no purchases on the card would be interest free, even if payment was made to clear them at the end of each month. Thus the card attracts the full interest payment every time it’s used, until the transfer debt is cleared. Not sure how sneaky this is, but anyone skimming through the letter might be tempted to transfer debts and find out, the hard way that it costs a lot more than was bargained for. I was told that this was a special offer because I was a loyal customer. So much for loyalty.

When you borrow anything you have to pay it back!!! If you really look at the 0% transfers over a period of 12 to 24 months at 2.99%, really speaking you are borrowing @ 1.5% over 24 months or 2.99% interest over 12 months. At this rate which is excellent in my opinion, I would make sure I never make a mistake in paying back regularly. I have been using these offers for years and it has worked really really well for me and my business. Try borrowing from anywhere else at less than over 5% if you can borrow without all the jargon that goes with it.

I think Which? may have surpassed themselves on the smoke without fire media piece. We have seen plenty of these offers over the years and it is pretty plainly stated how it works.

There are some wrinkles which existed and some have been addressed over the years but basically it is a roll-over loan with a very low rate of interest compared to going to a Bank.

If you would like to re-title the piece ” survey reveals many people are illiterate and
innumerate” and then run a serious of on-line courses illustrating the pertinent points in these offers THEN I would be impressed.

So” No” I have never been caught out when I have used them, and I do not think any action is required by the companies.

Overall I am astounded and even in disbelief at the findings so can we have details of sample size, demographics, and the actual process. Since the election I think surveys have been shown to be very fallible and to restore confidence perhaps Which? can lead the way by being open in this matter.

Hi diesel, thought you might like the detail on the survey which was a bit too much info for the convo:

Which? Credit Card Choice Survey: Populus, on behalf of Which?, interviewed a representative sample of 2,026 GB adults online between 6th and 8th March 2015.
Data were weighted to be demographically representative of all GB adults.

To calculate the cost of a balance transfer deal we told consumers to assume a debt of £2,400 is placed on a card with a balance transfer deal length of 25 months and that the debt will be paid off in 24 months – so within the deal period. There was a balance transfer fee of 1%, so it would cost £24, which was chosen to make the calculation as simple as possible for people. They were told to assume that no extra spending would be made on the card.

To see if people could identify the cheapest card for a balance transfer deal, we gave people a scenario of someone looking to take out a new credit card who has £2,200 in debt on two cards that are charging him interest. They are therefore looking for a card to make it cheaper to repay the debt and plan to repay debt in full over the next 18 months and not use the card for spending. We asked people to identify the best card from five options, showing information on: the length of the 0% balance transfer deal, the balance transfer rate after the deal period, the balance transfer fee, the length of the 0% purchases deal, the purchase interest rate after the deal period, the representative APR, and cashback rate for spending. For data quality purposes, only respondents who successfully answered a preliminary question were included in the results.

Was this online?

I assume it is this company that pays for respondents?

I have written elsewhere o the nature and quality of the respondents to these sites. I am not impressed AT ALL.

That’s a little bit unfair diesel if I’m honest.

I’m one of those people who do surveys online. Please don’t paint us all with the same brush 🙂

It would be interesting if Which? Connect also carried out a survey of its 60 000 (?) members to see if they were capable of spotting deals.
When Which? carries out surveys it would be good if they published exactly what the survey asked. Members would then be able to make better-informed comments.

Sorry Lee, I know you and trust your answers.

I was referring to a case where paid respondents were filling in a survey on pornography and schools and it was meant to be completed by them As it was reported in a call centre environment this group were filling in the replies as they guessed children might.

This included a couple of people with no children.

No worries diesel. I know some are like that, and again some people just click anything / put any old answers in.

Just sometimes people forget some of us are genuine when we do surveys, but like i say, no worries 🙂

SilverJohn says:
24 September 2015

Well said Diesel. I’ve just transferred a balance from Tesco to Halifax and it was very straightforward. I deliberately chose a 0% interest and 0% fee card as I am moderately intelligent and can read and understand English.
Which could do with focussing on something more relevant like Tax Evasion, Benefit Fraud, NHS Fraud or a thousand other things which are far more important than this.

@patrick, I’m a little confused by your reply. Was the £2400 on a 1% transfer fee designed to see whether respondents were capable of making the fee calculation before their answers were accepted for the later task?
It would be useful to see just how the main question was set out for respondents to evaluate. Presumably the question showed copies of the terms from the five providers? Can you link to the survey question?

Data were weighted to be demographically representative of all GB adults.

You do know that few statisticians agree on the relative merits of the various Data weighting methodologies?

But in the main I agree with Malcolm and DT. These surveys are far from simple, both to conduct and to complete, and this one was singularly odd in some ways, not least being we’re not told the details behind the survey construction nor the consequent analysis.

And that poses an interesting question: are the details not provided because Which? customers are not felt to be sufficiently intelligent to comprehend them?

Why doesn’t the balance transfer (or money transfer) fee have to be included in the APR? Even annual fees have to be taken into account in the APR, so why not these fees? These fees are so obviously a substitute for interest, but paid upfront. I take advantage of these deals if the fee’s annualised interest rate (over the “interest free” period) is lower than the 1.35% that I pay on my offset mortgage. But many other consumers can’t make an informed decision because the fee is misleadingly omitted from the APR.

NFH, I’m not clear why APR comes into this if you only use the card for an interest free balance transfer. Surely the only things that matter are the initial fee and the interest free period.

The upfront fee needs to be quoted as an APR. For example, if it’s a 1% fee for a 6-month “interest-free” balance transfer, then it’s approximately 2% APR (subject to compounding which is why it’s not exactly 2%).

IME APR isn’t reliable, since no two lender ever seem to arrive at the same interpretation. Some years ago I queried that with Which? whose response suggested they knew that but there was little they could do.

Steve B says:
24 September 2015

I think ‘Which’ are overselling the so-called ‘Sneaky’ element of this campaign. Similar to other such subjects in the past such as miss-selling of endowment mortgages, the customer must take time to read the small print and act responsibly. I never expect anything for free – particularly financial products. Without exception, all the offers I receive from different providers clearly state that there is a balance transfer fee – as well as all the other provisos when taking out this type of deal.

People should really take responsibility for their actions or lack thereof – if they can’t be bothered to read the terms then why is this the fault of anyone else?

This campaign suggests to me that it’s a quiet news day on the consumer front!

Whilst were talking of miss-selling, perhaps you might take time to explain to us all how you justify such an expensive subscription charge for your online service. Back in the day when I was a magazine subscriber I often felt miss-sold when it was obvious that many of the reports where simply regenerated cut and pastes of previous versions with one or two new products added.

I tried to remove the comment from here as I haven’t been victim
of this as I don’t have a credit card but have been hit hard by other banking scams and they need hitting hard.

I think which could concentrate on Bt line rental.the government wants everyone to be online but older people can’t afford the line rental and the cost of broadband which is very confusing

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I always had the idea that law enforcement paid for by taxes was a device paid for by everyone out of taxes to protect the innocent and prevent them from being robbed. The FCA is an enforcement agency yet it allows Commercial companies to charge one in excess of one thousand per cent and to advertise openly on Commercial Television obviously aimed at persons whose understanding of Credit and debt is not very good. They should be fining both the Companies advertising and the Advertising companies as the companies are criminals and the advertisers are aiding and abetting a criminal act

Is the average consumer really that thick?! Every business, bank and organisation has only one goal.. That is to empty your pocket into theirs!

So, with this in mind, are the lovely people of creditcard-land really going to let you extend your borrowing period from another credit card company for FREE? NO!

4 out of 5 people need to really wake up!! There’s nothing underhanded or sneaky about making money out of customers.

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I have used a balance transfer occasionally to help me over an expensive period and have found my card suppliers to be totally upfront with the transfer fee. I think this petition is a waste of time.

It is not only cards that is a problem .The thing that gets me is “you are the lucky winner of a TV or a spending vowcher “then you go through pages of trying to make you subscribe to hundreds of things ,then you never get your prize.Or something is given away free plus stupid postage charges.
Insurance costs for renewals .

A few random thoughts.
1) I agree that the offers seem clear 0% interest plus x% transfer fee.
2) I thought the rules were that the APR had to be disclosed and that the APR included the effect of all charges. The approach of separation of interest and transfer fee seems a sneaky way of getting round this.
3) Lots of offers, not just credit cards, have hidden small print, now referred to as “terms and conditions”. Vyron Hill obviously has experience of this and has highlighted an example, namely purchases attract interest immediately. If these points are not prominently displayed then, again, I think the credit card companies are being sneaky.

The fee is not an interest charge. This talk of APR is irrelevant to the agreement. When it says 0% that is the APR%. *

If I pay it all back the following month I will not have any reduced payment refunded. It is a FEE.

* It will advise you of the APR once the interest-free period has expired. That is entirely relevant.

this needs looking at

I have found 0% transfer deals very useful over the last several years. I would certainly oppose a ban on companies making such offers. Whilst the word “free” in some advertising is incorrect, it surely would be possible to make the advertising clearer and easier to understand.