OFT tells Barclays its 0% rate is not 100%

Barclays faced more embarrassment over its Barclaycard credit card yesterday after the Office of Fair Trading forced it to withdraw adverts for its "0% forever" offer.

A month after Matt Barrett, the bank's chief executive, stunned the Treasury select committee of MPs by admitting he did not use plastic to borrow money, the OFT told the bank its advertising for the credit card was "highly misleading".

The OFT made it clear yesterday that it would have applied for a court injunction to stop Barclaycard - the country's biggest credit card provider with 9m customers - using the advertising if it had not agreed to stop the campaign.

Even though it has axed the adverts, received by millions of customers in mail shots, Barclaycard said it did not agree with the OFT. Barclaycard said that customers signing up for the offer had not been confused.

The OFT said Barclaycard was wrong to claim the 0% rate was forever as it was only available on balance transfers and only then if the customer used the card to make purchases which attract a higher interest rate.

Consumer groups felt the OFT's move would protect customers.

Ashleye Sharpe, head of money research at Which?, said: "Deals like Barclaycard's 0% forever offer are deeply cynical. They target people who are trying to pay off their debts and yet the conditions of the deal trap them into running up further debt which is charged at a much higher rate and cannot begin to be cleared until the balance transfer is paid off."

James Plaskitt MP, who challenged Mr Barrett over the "0% forever" at last month's select committee hearing, said: "The 0% forever offer was grossly misleading. Matt Barrett could not defend it before the Treasury committee; the OFT are right to blow the whistle on it."

The OFT action comes at a time when MPs and the government are concerned about the debt levels of consumers who have been taking advantage of historically low interest rates to borrow money cheaply.

The OFT challenged the legality of the adverts under the 1974 Consumer Credit Act.

It felt consumers could be misled into spending at least £50 a month on the card to obtain the 0% rate on the balance transfer.