BRITS with hefty credit card balances are throwing away thousands of pounds by not switching their debt to a balance transfer card.
New figures released today by UK Finance revealed a whopping £1.62billion of transfers took place in January – the highest level since March 2006.
Getty – Contributor There were £1.62billion worth of balance transfers carried out by Brits in January – the highest amount since March 2006
Balance transfer cards lets you shift your existing debt to a new card without paying interest so you can clear your balance more quickly and cheaply.
But money experts are warning that while borrowers are still keen to move their debt around, the longest deals on the market are starting to be trimmed back.
Andrew Hagger of the Moneycomms website said Barclaycard has become the latest lender to cut back its headline balance transfer offer from 37 to 36 months.
That means only two providers, MBNA and Nuba, are offering 37 months interest free – but a year ago there were 11 major credit card firms offering 0 per cent periods of 40 months or longer.
Balance transfer cards: What you need to know
SHIFTING your balance can be a great way to cut the cost of your debt. But you must use them properly so you don’t just add to it.
Always clear your debt – Credit card firms don’t offer these deals out of the goodness of their hearts. They rely on you not clearing your balance by the time the 0 per cent deal comes to an end so it can start charging you interest.
Always make your payments – If you don’t keep up with your monthly payments, you could lose the 0 per cent offer and start being charged interest. Always try and pay-off more than the minimum payment too to clear your debt quicker and don’t spend on the card either.
Check your deal – Like with all credit cards, you might not be offered the headline deal if you don’t have the best credit history. Use MoneySavingExpert’s eligibility calculator to see what deals you are likely to be accepted for.
According to Mr Hagger someone with a £1,000 balance on a typical credit card could save £98 in interest payments over a year if they switched to a balance transfer card and £293 over three years.
Someone with a significant balance of £5,000 would save a whopping £488 in interest over 12 months and an eye-watering £1,465 if they switched to a card that offered a 36-month 0 per cent period.
He said: “Credit card companies are tightening their criteria and the appetite to be top of the long term best buys has faded dramatically.
“There were 679,000 transfers made in January, so the level of demand from consumers is showing no sign of decline.
“There are some excellent card details still available if you have a good credit rating but don’t hang around as such stand out deals won’t be around for much longer.”
Back in November, MoneySavingExpert’s Martin Lewis, gave a similar warning and urged Brits to take action if they wanted to take advantage of lengthy 0 per cent offers.
The Sun Online has taken a look at the longest balance transfer deals on the market and what you need to be aware of when it comes to shifting your debt.