According to recent reports the fees charges on balance transfer credit cards could be set to fall in the future, as lenders try and battle it out to increase custom by using a new form of incentive. In the past the incentives have included the headline interest rate and freebies for new customers. However, with balance transfer credit card transfer fees having soared over the past couple of years lenders have found that cutting the fees is a good way to attract increased custom.

Many card providers were using longer interest free periods to try and attract new customers, but these seem to have peaked at around fifteen months, leaving card providers to find another incentive for new applicants. Barclaycard has recently reduced the transfer fee on its balance transfer card from 3% to 2.5%, which means that customers will only have to pay 2.5% of the total balance being transferred by way of a fee.

Over the past eighteen months the average balance transfer fee on these credit cards has soared from just 1.7% to 2.4%. Around 75% of providers offer 0% balance transfer deals, so it seems that competition is set to really heat up when it comes to transfer fees.

One official said: ‘The best-buy tables have been dominated over the last couple of years by cards offering lengthy 0% balance transfer deals, but there inevitably comes a point when trumping the pack becomes impossible.’

However, consumers that are looking for a 0% balance transfer credit card are urged to take a number of factors into account, including the interest free period and the balance transfer fee charged.