2005 has been a bad year for the credit card companies. Whilst consumer demand has been buoyant with card balances topping £55 billion, they’ve been faced with rising costs which have hammered down their profits.

Their two biggest problems have been people switching between credit cards to take advantage of the 0% interest deals which to date have been so common, and rising levels of bad debt.

The credit card companies have responded in a number of ways. Some have cut the length of their 0% concession period, others have raised interest rates and introduced fees for balance transfers.

Halifax is the latest card to cut the 0% concession period on its One card from 12 months to 3 months. They followed the Nationwide which ended its 0% offer altogether.

On the interest rate front, in the last three months we have seen the average interest rate rise from 14.9% to 15.04% led by rate increases from Barclaycard, Mint and Simsbury’s.

When it comes to balance transfer fees, Capital One and MBNA have both introduced a 2% fee for balance transfers.

We expect the trend for the cost of credit card finance to continue to rise - so if you need a new card, you’ll have to move quickly. In our view the five best current deals are:

· Virgin – 0% on balance transfers for 9 months
· HSBC – 0% on balance transfers for 9 months
· Morgan Stanley’s Platinum Card – 0% on balance transfers and purchases for 6 months
· Co-operative Bank – also 0% on balance transfers and purchases for 6 months
· Sainsbury’s Advantage Card – 0% on balance transfers and purchases for 5 months

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