Focus on: Tesco offers more on its credit card

Interest free balance transfer offers have lengthened considerably over the past couple of years, giving borrowers much needed respite and greater opportunity to pay off their credit card debt for good.

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Competition among card providers to offer the best deal has been fierce and Tesco Bank is the latest lender to up its game in this category. So let's take a closer look.

What's the deal?

Tesco Bank has increased the interest-free period on balances transferred to its Clubcard credit card from 22 months to 23 months. This means you have almost two years to pay off your debt without worrying about interest stacking up.

Should you make any purchases with the card, you'll also benefit from nine months at 0% interest, up from the previous six months.

The Tesco Clubcard credit card also doubles up as a Clubcard so you'll earn points every time you spend at an accelerated rate of five points for every £4 spent in Tesco stores and petrol stations and one point for every £4 spent elsewhere.

As an additional perk, there is no fee when you purchase travel money from Tesco Bank providing you pay for it with your credit card.

 

Any catches?

The main catch with this card is that it’s not market-leading. Barclaycard's Platinum credit card with Extended Balance Transfer card has clinched the top spot in the balance transfer stakes with one extra interest-free month on balance transfers at 24 months.

Tesco's advantage is it offers a lower transfer fee of 2.9% compared to Barclaycard's 3.2%. But even this can be beaten elsewhere.

Barclaycard's 21 month Platinum balance transfer card, for example, has a fee of just 1.45%, but applicants must act fast as this is only on offer until January 31. And as the name suggests, the 0% period is for 21 months only. You can read more here.

If you don’t pay off the balance in the allocated interest-free time, you will be charge an annual percentage rate (APR) of 16.9% (variable), which is also the rate you will pay on purchases if you don’t clear the balance.

Be aware that, as is typical of the market, you can't transfer a balance to the Clubcard credit card from an existing Tesco credit card.

What's the verdict?

If you're a regular Tesco customer and looking for a cheaper way to clear your debt, this card is likely to be the perfect addition to your wallet. Despite not being the market-leader, it's not far off and providing you clear your balance in full before the high APR kicks in, it could be the ideal solution for tackling your debt – and getting something back in your pocket.

It's also a great option for borrowers who can't apply for Barclaycard's 24-month credit card because their debt is on an existing Barclaycard.

On the other side of the coin, if you have no existing debt to focus on but are looking for a card solely for spending purposes, a nine-month interest-free period can easily be beaten.

But you don't need to branch out far because Tesco Bank also offers a Clubcard credit card for purchases which comes with a market-leading 16 months 0% on spending. It allows you to earn Clubcard points in the same way as the balance transfer card.

Top tip!

If you're struggling to pay off a large debt and will need longer than two years to clear it, an alternative is to move your balance to a low APR credit card as these tend to offer even longer deals.

The Barclaycard Low Rate credit card, for example, has a representative APR of 4.9% for 36 months. The icing on the cake is the fact there is no balance transfer fee.

Another option is the MBNA Rate for Life credit card. Although it has a slightly higher representative APR of 5.9%, it makes up for this by offering the rate for the life of the debt. In other words, there's no deadline by which you need to have paid off your debt in full, making it ideal for those of you who have a large amount of debt to clear.

The card does have a transfer fee but is relatively low at 1.5%.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct. We’re free, independent and compare all UK credit cards, as well as offering exclusive deals you can’t get anywhere else. Contact MoneySupermarket.com at Moneysupermarket House, St David’s Park, Ewloe, Flintshire, CH5 3UZ. © Moneysupermarket.com Ltd 2013.

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