Rate “tarts” who switch credit cards to dodge interest charges in the introductory period of a new deal will be scorched to the tune of £535 million in the next year, predicts price comparison service uSwitch.com
It says they will find they can’t switch, and must instead remain on cards already carrying a total of £3.5 billion of debt.
The website says rate tarts had a ball in 2008, carrying out an average 650,000 balance transfers each month. As card companies crack down, it is becoming much harder to fix a switch, even with 178 balance-transfer credit cards, compared to 204 a year ago.
“The country is in economic turmoil, a situation catalysed by bad consumer credit,” says uSwitch’s Louise Bond.
“The knock-on effect for credit-card customers is that those with a less than perfect credit history could find themselves being turned down for the next best zero per cent deal, forcing them to pay interest.
“This is a huge problem for switchers. These people accumulated debt based on the fact they do not have to pay interest on it.”
Ms Bond urges cardholders to check their credit record – on www.uswitch.com/credit-reports – before making any applications for credit. The big risk for those turned down for several cards is that this will damage their credit score.
She also urges customers who don’t plan to pay their balance off in full during the zero per cent balance transfer period to consider “life of balance” cards, which charge one low rate of interest for the entire time the balance is on the card.