New 20 month 0% credit card with £100 cashback

First Direct have pitched into the balance transfer card market offering a 20 month 0% deal. Robert Powell takes a closer look at the account...

Amidst the doom and gloom of post-credit crunch Britain, one market has been quietly bubbling away.

Yes, balance transfer credit cards have seen their 0% periods soar recently. Back in 2006 the longest interest free deal available was just 12 months. Fast forward five years and 20 and even 22 month 0% credit cards are commonplace.

And now one more credit card provider has joined in this battle for the longest 0% period...

20 months at 0%

The First Direct credit card offers 0% on balance transfers for 20 months. So if you have debt sat on other expensive credit cards, you can shift it into this account and pay no interest for a full 20 months.

However it is worth pointing out that like most credit cards, this new account does not accept transfers from other cards provided by the same issuer. And as First Direct is part of the HSBC group, that rules out transfers from Marks & Spencer Money accounts, the John Lewis Partnership Card and of course HSBC accounts.

In addition, you will have to pay a fee of 2.9% on any balances transferred; with a minimum charge of £5. You’ll also want to ensure that you clear the entire balance before the 0% period runs out and the rate reverts back to a hefty APR of 19.9%.

But how does this new deal stack up against other 0% balance transfer cards? Here are the current market leaders:

Card	Balance transfers	Balance transfer fee	Representative APR	Purchases
Barclaycard 22 month Platinum Visa	0% for 22 months	2.9% (actual fee 3.2%, refund brings it down to 2.9%)	17.5%	0% for 3 months
Halifax MasterCard	0% for 22 months (max transfer £3,000)	3%	17.9%	0% for 3 months
Barclaycard 20 month Platinum Visa	0% for 20 months	2.6%	17.5%	0% for 3 months
First Direct Visa Card	0% for 20 months	2.9% (min £5)	19.9%	N/A (19.9% from start)
Virgin Money MasterCard	0% for 19 months	2.85%	16.8%	0% for 3 months
MBNA Platinum Visa	0% for 18 months	2.75%	16.7%	0% for 3 months

Source: lovemoney.com credit card centre

So as you can see, the First Direct deal isn’t the longest 0% card about. That title goes to Barclaycard’s 22 month Platinum Visa account. The First Direct card is also flagging on the 0% purchase side. It offers no interest free period on new spending, while every other card comes packaged with three months at 0%. But as we all know, you really shouldn’t be using a balance transfer card for spending anyway; especially when you can get hold of other deals offering lengthy interest free periods on new purchases.

However the First Direct card does have one big plus point. Namely, it's provided by First Direct. Yes, First Direct consistently tops polls for customer service and is frequently praised by both personal finance commentators and readers alike for its high standards.

So far, so good; so what’s the catch?

The catch

The First Direct card is only available to new credit card customers (who haven’t held a credit card with the bank in the last six months) with a First Direct 1st Account – the provider’s current account. But if you are prepared to change your current account, you could do a lot worse than First Direct’s offering.

The account comes with a free £250 overdraft and offers £100 to all new customers changing to the bank through their designated switching service.

So you get £100 for opening a current account which enables you to take out a 20% month 0% card!

And what’s more, if you don’t like the First Direct service and decide to leave within a year of opening your account – the bank will pay you another £100 when you go.

However if you do decide to opt for the 1st account you will have to pay in an income of at least £1,500 per month.

First Direct also have a few other deals solely available to 1st account holders. These include an 8% regular saver, 2.70% Cash e-ISA and a 6.8% unsecured loan (between £7,500 and £15,000).

And First Direct isn’t the only bank offering exclusive deals to its existing customers...

Santander Zero Account

Since revamping their current account offering back in January, Santander has been placing a large level of emphasis on loyalty. As a result, most of the bank’s best deals are only available to existing customers as well as those who look unlikely to leave the bank. And Santander’s Zero account is no exception.

The Zero is pretty unique as it offers no fees if you exceed your agreed overdraft and no fees from the bank when you use cash machines anywhere in the world. Your agreed overdraft will also attract 0% interest for the first four months. After which all overdrafts will be charged at 12.9% AER. You’ll also earn 5% on balances up to £2,500, providing you pay in at least £1,000 every month.

However you’ll only be able to get your hands on the Zero account if you hold a Santander mortgage, investment product or savings account (with over £10,000 credited for at least three months). Customers who are not eligible for this account can still get hold of an interest free overdraft and 5% interest rate by opting for the Preferred Current Account instead.

More deals for existing customers

HSBC also offer a credit card with 15 months at 0% on balance transfers and 3 months 0% for purchases that is only available to existing current account customers. The bank also has a regular saver account paying out 8% to customers who hold the HSBC Premier, Advance, Advance Graduate or Passport account.

Halifax takes a similar tact with their Reward ISA – paying out at 2.80% to existing or switching current account customers (who pay in £1,000 per month) but only 2.60% to everyone else.

NatWest’s YourPoints World MasterCard comes with 0% for 13 months on purchases and balance transfers, as well as offering a range of voucher rewards for shops such as M&S, Amazon and Boots depending on how much you spend each month. But again, the deal is only available to existing NatWest customers.