Recent research by the Abbey has discovered that over 3million people will transfer credit card balances in the first three months of 2008, with men transferring the largest budgets.
The average balance switched from interest-bearing credit cards to zero percentage transactions is anticipated to be £ 2,666, but men will switch an average £ 3,395 compared to women who will move balances of £ 1,820. In total over £ 9billion will be switched on UK credit cards, with people aged between 35 and 44 the most likely to look for better credit card deals; 11% of this age group will transfer balances compared to seven per cent of the credit card holding population. Over-65s are the least likely to switch balances with only three per cent of that considering considering a transfer.
Although providing temporary relief by negating interest payments, switching balances is not a solution to credit card debt, but managing director of Abbey Credit Cards, Roger Lovering thinks that it is still advisable to switch as soon as you can. "It's good to see people starting to get their finances in order, so soon after the festival period," he said.
"Many people find their January credit card bills an unpleasurable surprise, and it is advisable to keep an eye on finances and not contribute to debt by paying over the odds on credit card interest."
However, not covered by this research was the amount of people who intend to switch their credit card balances to low-cost transfers that apply until the balance is repaid. This is akin to a low-cost loan, but it is important that no further purchases are made with that card. As repayments are used to clear the cheapest debt on a credit card first, the low-life-balance loan would reduce, as purchases would continue to rack up interest at a typical rate of around 16%.
To ensure that they are not providing the switching service for free, credit card companies apply fees, increasing up to three per cent of the transferred balance. With an estimated £ 9billion being switched between card accounts, fees charged to cardholders for the privilege will amount to almost £ 270million.
Anyone considering transferring a balance from one credit card to another should ensure that they read the small print very carefully as some providers are now offering their interest-free deals with strings attached. Some insist that a minimum amount of retail purchases are made on the card during the promotional period, so if you are thinking of switching make sure that you compare credit cards carefully and the benefits they offer before transferring balances!