Positive Payment Order Affects Card Market

The move to Positive Payment Order is shaping the way products are structured in the credit card industry and this week the market leaders tweaked their offerings to try to stay at the top of the comparison tables. The UK credit card industry is undergoing radical changes at the end of the year with five new pieces of legislation coming online to improve the lot of the consumer.

Currently most credit card companies allocate customers payments to the interest bearing balances with the lowest interest rate first, but from the end of the year this will reverse so that the customer clears the most expensive balances first. Some companies have already announced their move to the fairer arrangements including MBNA and Virgin Money. Nationwide and Saga have always used the fairer system.

So who's offering the best deals on balance transfer credit cards at the moment? Currently the best deal seems to be with the newly relaunched MBNA Platinum Plus credit card which offers 0% APR on balance and money transfers for 16 months, as well as a competitive overall APR. Also consider the NatWest Platinum Credit Card or the Barclaycard Platinum Balance Transfer card which offer 16 months at 0%. Their balance transfer fees are all the same currently at 2.9%.

You should also look at the Nationwide Gold Credit Card because as well as a good balance transfer deal, it has other quality features like a low overseas spending surcharge as well as positive payment order. Remember though, deals change quickly, and to keep up with the latest balance transfer news check back on our Compare Balance Transfer Credit Card tables. Our comparison information is updated daily.

With careful management and timing, it's possible to move your credit card balances between 0% balance transfer deals, effectively ‘borrowing' that money interest free. (Remember there's nearly always a balance transfer fee each time you move to a different card).

Until positive payment hierarchy becomes widespread however remember that you need to keep the efficiency of balance transfer credit cards in perspective, and remember the golden rule ‘never use balance transfer credit cards for purchases'. Most credit card companies still allocate your payments to cheaper interest balances first and the higher interest items like new purchases last.

Don't be surprised if when the industry has completed the transition to positive payment order, many of the existing balance transfer deals disappear.

Depending how long you anticipate it will take you to clear any outstanding balances, also consider the low interest balance transfer cards like the Barclaycard Platinum Simplicity Low Interest, or the MBNA Platinum Rate For Life Card. These offer a comparitively low rate of interest on balance transfers, and lower balance transfer fees than the 0% on balance transfer cards.

That said, here's a checklist for getting the best out of balance transfer cards, and things you should consider and be aware of!

• Most balance transfer deals are for new cardholders only, and won't allow transfers from existing credit card accounts within the same banking group.
• The ‘0% on balance transfers' deal is normally for a limited time (usually the first three months of a new card account) and so if you want to take advantage of this facility, make sure you do so within the time limit.
• Set a reminder on your phone or your PC to review our 0% on balance transfer deals again around 2 months before the end of your 0% period. If you want to switch your credit card balance to the next best balance transfer deal around, it can take up to 6 weeks to process the application and make the balance transfer and you need to plan the transition carefully.
• Remember making several credit card applications in a short period of time will harm your credit score. Unless there's a good reason, more than three applications a year may be looked at negatively.
• If you're worried about your credit score for getting a new card, be cheeky and call your existing card provider and tell them you're considering a new balance transfer deal with a competitor, but you don't really want to bother with all that paperwork. Ask them if they can do anything about the interest rate on your existing credit card. If you've got a good payment record with them, they would probably prefer to keep you as a customer and may offer you a better deal.
• Make sure you can comfortably afford any new minimum payments when considering any new credit card deals. Its great to be saving money on interest, but each card has a different minimum payment structure and you obviously want to be looking at being able to reduce your level of overall debt as well as making a net saving on interest.