The average British credit card holder wastes £279 a year by not taking advantage of 0% balance transfer offers.
Lenders are pocketing some £2.3 billion a year in interest payments that consumers could avoid by moving their debt to another card. This is despite the fact that only 3% of credit card users pay their balance in full every month avoiding any interest payments at all.
Research from Moneysupermarket.com suggests that around 65% of credit card holders have never transferred an outstanding balance to an interest-free card. The website’s poll found that a quarter of respondents either couldn’t be bothered to enquire about transferring a balance or didn’t understand how to.
The survey was published in the same week that two lenders introduced record introductory offers. Borrowers who successfully apply for a Barclaycard Platinum card can take advantage of 0% on balance transfers for 17 months, the longest interest free period the lender has ever offered.
M&S Money launched a card offering 0% interest on purchases for 15 months, also the longest period on record for the firm.
Commentators predict that these offers could prompt other major credit card providers to respond with similar deals as competition returns to the market after banks restricted their lending in the wake of the financial crisis.
Kevin Mountford, head of banking at Moneysupermarket.com, said: “As the nation’s wallets continue to be squeezed by higher living costs, it is crucial consumers look to pay off their debt quickly and efficiently to prevent additional interest from accruing.
“Anyone with an outstanding balance on their card should consider switching to a product offering 0pc interest on balance transfers such as Barclaycard’s Platinum credit card or Nationwide’s new credit card, both offering 17 months interest free.”
He went on to say that 0% offers might not be the best solution for those with poor credit scores: “If you are in this situation and have a debt you need to shift, you need to look at all of your outgoings and try and get a target for paying your debt down. The longer to take to pay off your balance, the more it will cost you in interest.
“Anyone looking to switch cards should always check which card is most suitable for their personal circumstances as different lenders will treat each applicant differently.”
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