Battle of the 0% deal: MBNA offers 39-month Platinum Card balance transfer

We're barely a week into the new year yet the battle for 0 per cent credit card business is already well under way with MBNA throwing down the gauntlet to its rivals with its longest ever 39-month Platinum Card 0 per cent balance transfer offer (with a balance transfer fee of 2.98 per cent).

This has been swiftly followed by Halifax upping its 0 per cent balance transfer term to 38 months (with a 2.75 per cent BT fee) and Lloyds Bank subsequently pitching in with a 30-month card with just a 1 per cent balance transfer fee.

January is traditionally the busiest month for switching, following the Christmas excesses. The level of balance transfer activity in January has grown steadily in recent years: British Bankers' Association figures show 412,000 transactions totalling £0.82bn in the first month of 2010, rising to 592,000 switches with a combined value of £1.34bn in 2015.

If the increased card activity in late 2015 has continued over the festive period, £1.4bn to £1.5bn pounds of credit card switching could take place this month.

At the end of November 2015, there was £60.2bn worth of credit card balances, with a staggering £25.5bn of this sitting on an interest free promotional deal – and this doesn't take account of the pre and post-Christmas spending splurge. The push for longer and longer 0 per cent durations shows no signs of letting up, with the average 0 per cent term now at 22.5 months – up from 17.3 months at this time in 2013 and 11.9 months in December 2011.

The potential interest savings are huge , but the fact that card companies still seem to be able to make these 0 per cent deals work is no doubt due in part to the number of people who "fall off the wagon" by missing a payment or exceeding their limit and suddenly find themselves paying interest at 18.9 per cent APR or more.

If you've got a balance of £2,000 on your card at the market average rate of 18.9 per cent APR, you'll pay around £32 per month in interest charges; on £5,000 it works out at £80 and on £12,000 it will set you back £193 per month. Switching to a 0 per cent card makes good financial sense as long as you are disciplined. Just make sure you don't fall into the trap of spending on the card again, otherwise you could soon find yourself back at square one – or worse.

The key to getting the cheapest 0 per cent deal is not to focus on the longest deal – unless you need that length of time to clear your card debt.

As a rule of thumb, the longer the 0 per cent term, the higher the one-off BT fee; if you think you can repay in 30 months take a look at the new Lloyds Bank balance transfer card, where the fee is 1 per cent of the amount transferred. If you can repay within 23 months, then Halifax is offering this term without any BT fee, so you really could clear your balance without it costing you a penny.

I'm sure there will be further reaction to the latest MBNA best-buy offer from rivals Barclaycard, Tesco Bank and Virgin Money, but wonder if in 2016 the 0 per cent card market will reach its peak, particularly if the base rate starts to increase in the latter part of the year.

Andrew Hagger is an independent personal finance analyst from www.moneycomms.co.uk