Many consumers switch their credit card debts to a new provider in order to benefit from introductory 0% rates on balance transfers. However the trap many people fall into is applying for a credit card that is operated by the same company as their current card.

Consumers seeking to transfer credit card balances need to be aware of possible restrictions in the small print, which might forbid them from transferring balances to a card that is owned by their current card provider.

Therefore your application could be refused, if you do apply for a card which is operated by the company which provides your current card. Lenders within the same group of companies are not keen to offer the best rates to existing customers. Competitive rates such as 0% balance transfers are there to attract new customers to the group. This means that existing customers do not always get offered the same rates, despite having a good credit record.

For example, a person attempting to transfer the balance from a NatWest card to a Mint card will be rejected because both cards are owned by Royal Bank of Scotland (RBS). Similarly, a borrower who wants to switch the balance from Virgin to Alliance & Leicester will also be frustrated because both cards are operated by MBNA.

Financial website MoneySupermarket reports that 70% of cards on the market are issued by just four companies, which makes shopping around difficult.

Of the 400 different credit cards available to UK consumers, a whopping 189 of them are issued by MBNA alone. HBOS issues 51, but it does allow balance transfers between five of them, including the AA and Sainsbury’s Bank cards. The Cooperative Bank and Lloyds TSB issue a further 41 cards between them.

Even if you compare two cards side by side, they might have contrasting branding and appear to be different, but they may well be issued by the same provider. The best way to ensure that your potential lender is not part of the same group is to read the small print carefully.

Laura Mottram, of RBS, says: “I am afraid that these deals are promotional offers designed for new customers. It is not worth our while to allow customers to remain on a 0 per cent deal indefinitely.”

Paul Lawler, of MBNA, says that transfers between its cards are refused because the amount that you owe does not change. MBNA says that it would happily accept applications from existing customers, but it would then prevent them from transferring balances. It says that these restrictions are explained in the terms and conditions.

Below is a list of cards issued by the major banks. It is not an exhaustive list but provides an overview.

Barclaycard operates Barclaycard and Skycard

Capital One Bank operates Capital One

Cooperative Bank operates Northern Rock, Smile, Stroud & Swindon Building Society, Yorkshire Building Society

HBOS operates AA, Amazon.co.uk, Bank of Scotland, Birmingham Midshires, Cancer Research UK, Halifax, Intelligent Finance, NSPCC charity card, Sainsbury's Bank

HSBC operates Beneficial Bank, Hilton HHonors, Household Bank, HSBC, John Lewis and Waitrose, Marks & Spencer &MORE, Morrisons and The GM Card


Lloyds TSB operates Lloyds TSB

MBNA operates Abbey, AOL, Alliance & Leicester, Breakthrough Breast Cancer, BMI, British Heart Foundation, Cheshire Building Society, Dogs Trust, RAC, Sonycard, The National Trust, Virgin, WWF and many football club affinity cards including Arsenal, Chelsea, Liverpool, Manchester United and Spurs.

Royal Bank of Scotland operates NatWest, Mint, RBS, Shell and Tesco

Article added: 16/12/07