Mint scraps fee-free 0% card deals

Time could be running out for credit card "rate tarts" who jump from one introductory deal to the next, keeping debts interest-free by following 0% balance transfer offers.

Balance transfers with 0% interest rates have played a key part in the way credit card companies entice new customers, in what has become an harshly competitive market. Until the summer of last year, card providers offered this service free of charge.

However, last August Barclaycard signalled the beginning of the end for free balance transfers when it became the first card provider to announce the introduction of fees, charging 2% of the total amount moved, up to a maximum £35, on its 0% balance transfer deal.

MBNA followed suit, adding a 2% charge on the total balance transferred (minimum £2, maximum £50) to the majority of cards it issues, which include Abbey credit cards.

Mint, part of Royal Bank of Scotland, has become the latest card provider to charge a fee for the 0% balance transfer deal on a Mint card. Mint introduced a fee of 2% of the amount transferred on January 1 2005, subject to a minimum fee of £5 and a maximum of £40.

A spokeswoman for Mint said: "0% deals continue to be very popular. Of course, they cost us money and in adding a fee we are passing those costs on to the people who benefit from 0% deals rather than charging all our customers more."

Stuart Glendinning, director of credit cards at finance comparison website Moneysupermarket, said: "Whilst the deals on offer have been great for consumers, the question remains of how far providers can go in offering ever longer 0% deals. The longer the period, the harder it is to make a profit.

"Barclaycard is the UK's biggest credit card provider and their decision to implement a fee did, in my opinion, trigger others to follow."

He said that the days of fee-free 0% balance transfer deals could be numbered as providers find ways to avoid losses from customers that frequently "churn" debts from card to card without purchasing on them.

Mr Glendinning added: "Charging a fee on balance transfers is one way of recuperating some losses, given it is impossible to make money lending at 0% if the customer conducts no further transactions on the card.

"I expect other providers will take the lead by Barclaycard, MBNA and Mint and start charging for balance transfers, especially for periods of nine months and over. This isn't good news for customers."