Halt to credit card merry-go-round
Updated on 05 November 2008
Credit card companies are cutting back on 0% balance transfer deals, reducing the options for 'rate tarts' who rotate their debt between different providers, figures have revealed.
The number of companies with 0% balance transfer offers has fallen by nearly 10% in the past year with 75% of credit card providers now offering one of the deals, down from 82% in October 2007.
At the same time, the average length of time for which the 0% rate applies has also fallen, dropping from 10.1 months to 9.5 months, according to financial website MoneyExpert.com.
The group warned it expected the length and availability of the offers to continue to decline in the coming months, as firms become increasingly cautious about who they lend to.
It added that a number of credit card companies had already stopped promoting their 0% deals on price comparison websites.
Sean Gardner, director of MoneyExpert.com, said: "These figures should send a clear message to borrowers that the credit card merry-go-round is grinding to a halt. In the coming months it's going to become increasingly difficult to refinance your debt at 0% interest.
"This trend away from extended balance transfer periods underlies a shift in the industry which is increasingly cautious about the people it lends to and is far more interested in the profitability of its customers.
"A year ago there were dozens of cards with overall APRs of little more than 10%, but today the most competitive cards offer rates of 16% or more."
Virgin Money is currently offering the longest 0% balance transfer deal at 16 months, followed by Egg, which is offering 0% interest until February 1, 2009, while Barclaycard OnePulse and Tesco Personal Finance Bonus both have a 0% for 14 months balance transfer offer.
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