Halifax offer credit card customers extra borrowing

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The building society's customers can apply for a nine month money transfer at 0% interest (i.e. a balance transfer made straight to a current account - explained here) up until November 14th.

To take advantage of the deal, credit card customers will have to pay a fee: 3% of the balance moved to the current account, which - as you can see here - is fairly standard with all 0% balance transfer credit card deals.

The promotion has had a mixed response, however.

Irresponsible?

A limited time offer of free credit card borrowing - likened to a personal loan or overdraft but with, potentially, much higher interest rates than either - amounts to irresponsible lending, some argue.

Matt Hartley, the Consumer Credit Counselling Service's Media Officer told The Daily Mail that those who are tempted by the promotion, "should really question why you need the cash in the first place. This could be a sign that there is an underlying problem with your finances."

"If this is the case, it would be better to address the causes of your difficulties by looking at your budgeting, rather than accepting what may appear to be an offer of easy credit."

On the other hand, however, Halifax are only offering this promotion to a select number of customers and it's no different to the offers they could receive by taking out a new credit card deal.

In fact, this way they could use a super balance transfer to pay off an expensive overdraft or personal loan interest free without the fear of having a credit card application rejected, which can be damaging in itself.

Like all super balance transfer offers, the deal also limits borrowers to their card's credit limit.

In other words, they could take more or less the same risks just by spending with the same credit card.

'Proactive marketing'

Irresponsible or not, Halifax's attempt at proactive marketing may not have done great things for their reputation among at least some of their existing customer base.

Nationwide also found themselves facing angry customers earlier this year when they offered some of their credit card customers £20... if they spent at least £1,000 on their cards in May and June.

Credit card providers have been coming under fire for similar promotions for years.

Back in 2008, for example, consumer groups severely criticised a Barclaycard cash withdrawal promotion which encouraged consumers to borrow to pay for everyday expenses by withdrawing cash from ATMs using their credit cards, a transaction with an exceptionally high interest rate.

In the face of such strong criticism, such practices must persist because they're an important source of revenue for card providers.

In a similar vein, providers have started offering online discount sites recently.

Research from marketing firm Celent earlier this year seems to bear that assumption out: their survey showed that the 45% of credit card companies engaged in proactive retention were also the most successful at hanging on to their credit card customers in the long term.

Clearly some people are biting. Hopefully they won't find themselves bitten back.