Consumers planning credit transfers
Updated on 15 September 2008
Nearly one in four people are planning to transfer debt between credit cards during the coming year to take advantage of a 0% interest deal, research has showed.
Around 22% of people said they would be making use of one of the introductory offers during the coming 12 months, transferring an average of £1,604 each, according to high street bank Abbey.
The figure is up slightly from 19% of people who planned to shift their debt to a new credit card after Christmas, traditionally the busiest time for balance transfers, although the average balance has fallen slightly from £1,711.
People aged between 25 and 34 are most likely to take advantage of a 0% deal, with 34% planning to move their credit card balance to a new card during the coming 12 months.
Callum Gibson, head of Abbey credit cards, said: "The research suggests that balance transfers are providing much needed flexibility to cardholders at a time when many are feeling the pinch."
Meanwhile, financial website MoneyExpert.com predicted that balance transfer fees be could on their way down, following a saturation of 0% interest deals on the market.
The group said the fees, which can be as high as 3%, were likely to be the new battleground for credit card providers trying to win customers.
It said Barclaycard had recently fired the first shot by reducing the transfer fee on its OnePulse card from 3% to 2.5%, while continuing to offer a 0% interest deal for 14 months, and other providers are expected to follow suit.
Balance transfer fees have gradually increased during the past year and a half, rising from an average of 1.7% of the sum being transferred in January 2007, to 2.4% now.
But the group said with 75% of the market currently offering some form of 0% balance transfer deal, providers were looking for new incentives to pull in business.
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