Article here -
- New customers only - Interest free until August 2005 - Free extended warranties on electrical goods bought with the card (a year-long warranty for items over £150 and a two-year warranty for those over £500). - A Price Promise deal, which guarantees to refund the difference on goods over £50 bought on the card and then found more cheaply elsewhere.
Daytona
I haven't seen the offer yet other than websites suggesting this will happen. Being a Barclays customers I get to apply first from 1st June.
No doubt they will be a limit to the amount you can transfer, there previous offer still running is a 5k limit.
A friend of mine told me about a telephone call they received from MBNA about his credit card he had not used for over a year. The teleperson said that if he wanted they could up his credit limit from 9k to 12k and give him another 6 months at interest free. The teleperson suggested to him that he do a balance transfer to his bank account to gain interest on the money for six months and he would only pay 5 a month in repayments, then after the six months, repay the full amount. They required a decision immediately, thinking there was a catch he declined. He phoned up two days later telling a new teleperson of the offer and they re-offered, to which this time he accepted.
Unbelievable if the credit card telepeople are now telling you how to make money from them.
That is quite surprising.
Seeing as everyone is offering 0% on balance transfers these days, will it ever end? A lot of people do this anyway (transfer to a new card every 6 months etc.) so how are the card companies making their money? Where is their incentive to keep offering such a 'bargain'?
The only thing I can think of at the moment is that _most_ of the population are quite ignorant of managing their money in the best possible way, and so they make their money through those types of people (stupid APRs of like 20% etc.).
T.
They probably make their money from people who borrow at 0% and then either forget when the free interest period is up, or use the money for something else and don't have enough cash on hand to repay it all on time.
Being just a month late repaying after the interest rate goes up to
20% makes up for the free money they've lent.
They make money from retailers. 3% is normal I believe, unless a large company has negotiated a discount. AmEx charge 5%, which is why many companies refuse them.
Daytona
But it's stupid to buy things with these cards if you've transferred a balance, as you usually start paying off the balance before the things you buy on the card (and accumulate interest on the new items).
cd
You could always have one card for purchases and one for BTs. Probably doesn't matter though either way now as many issuers are also doing 0% on purchases.
T.
The card companies make their money from the money they charge the retailer on each transaction. The interest free offers are just ways to try and get consumers to move cards and/or spend more and thus earn the card companies more money on the transactions.
Without a hint of irony, snipped-for-privacy@isbd.co.uk astounded uk.finance on 01 Jun
2004 by announcing:
If, however, you only ever use a card to transfer a balance onto it and transfer it to another card before the 0% rate ends, the CC issuer is paying for the cost of the application, the card, the account maintenance and then the interest they're having to pay on the X,000 they borrowed to lend to you (plus inflation).
They never, as far as I can see, make a penny from you.
wrote
In that case, why don't they: (1) only offer 0% on *purchases* (not on balance transfers, where there is no retailer to charge!); and (2) offer better competitive cashback offers - to encourage even more purchases??
As I see it, a 0% bal.tfr. is an invitation to immediately max-out the card with B.T.s (giving optimum benefit from 0% rate) - but this actually *stops* the cardholder being able to make further purchases (no available credit left) ....
Aren't they just kicking themselves in the foot, if they are only after the percentage from retailer's??
Exactly. I have two credit cards which I always use for regular purchases, simply because they offer the best value for money available. One is a Capital One MasterCard card, which I use in the UK because it gives me 1% cashback. The other is a Nationwide Visa, which I use overseas because its the only card which makes no surcharge on foreign currency conversions.
I take full advantage of as many 0% balance transfer offers as I can, but once the introductory period is over I never use them again because they can't beat the deal I get from the other cards.
Chris
I've been thinking about this since my original post...
Do remember that most of the population probably don't have that much of a real clue about how to get the best deals in terms of financial services. So I guess 0% every 6 months is only utilised by a minority. The rest of the people pay the stupid interest rates and therefore the card companies recoup all their costs, including those from all 'types' of customers.
T.
It's not a lot different to "Interest Free" option credit.
They'll rely on a proportion of the punters not having the readies to settle the account at the end of the free period, or missing the option date, or missing a payment and being disqualified from getting interest free and being charged £30 for a system letter, (whatever) and paying through the nose.
DG
Looks like there's a receipe for the whole thing too now:
You are confusing the issue there, actually.
The providers of merchant services charge retailers to use a PDQ machine, with varying tariffs for the cards accepted. This charge is levied upon the merchant service provider by companies such as VISA, and accordingly down the line!
Though SOME credit card providers are associated with Merchant Servcies Providers, they are independent of one another. Good examples would be Lloyds and Barclays - both have large and vibrant merchant services divisions but have a separate cc wing. Barclaycard do not, however, benefit from the retailer using a PDQ!
MC
Bollocks.
How do you think my using my Egg card at a lloyds bank issued PDQ in Sainsburys generates money for Egg? A fee is payed by Sainsburys to Lloyds Merchant Services, but Egg make nothing.
MC
Interesting - thanks
Daytona
Without a hint of irony, "Marcus Collie" astounded uk.finance on 08 Jun
2004 by announcing:
They do. The merchant pays their fee to the acquirer (say, Streamline). The acquirer pays a fee to the issuer (Barclaycard, for instance). A fee is also payable to the card scheme (VISA/Mastercard).
Without a hint of irony, "Marcus Collie" astounded uk.finance on 08 Jun
2004 by announcing:
Lloyds pay an interchange fee to Egg.
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