11% increase in longest debt transfer deals
Michelle Slade, analyst at Moneyfacts.co.uk, comments:
“In order to get by many people are resorting to using their credit card. As balances increase, many may be looking for a balance transfer deal.
“Customers are in luck as the longest 0% deals for terms of 12 months or more have increased by 11.4% since August last year.
Length of 0% balance transfer deal |
% of all deals August 2007 |
% of all deals August 2008 |
% Change |
5 months or less |
5.6% |
6.3% |
+0.7% |
6 to 8 months |
38.0% |
33.9% |
-4.1% |
9 to 11 months |
20.1% |
12.1% |
-8.0% |
12 months plus |
36.3% |
47.7% |
+11.4% |
Source: Moneyfacts.co.uk 1.9.08 |
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“This is great news for consumers as they can have longer to reduce their debt and as a result less marks on their credit file as they wont need to switch as frequently.
“Balance transfer deals are a fantastic way to reduce outgoings as well as reducing the overall interest paid and cutting the time it takes to repay the debt.
“On a £5K debt an interest rate of 15.9% APR, repaying the minimum each month (2%, min £3), you will end up paying an additional £7,548 in interest over 43 years. By switching to the Virgin Money MasterCard which offers 0% for 15 months, interest will be cut to £1,786 and the time to repay cut to 11 years, saving you £5,762 in interest.
“If you haven’t repaid the debt in the 0% period, further savings can be made if you switch to a new deal.
“The increase in longer term balance transfers comes at a price with a 8.9% reduction in the number of credit cards offering introductory purchase deals. Today just 6.7% of cards offer 0% for nine months or more, compared to 15.6% in August 2007.
“Consumers may also run up against another hurdle if they have less than perfect credit histories. Although longer deals on the market, it is not known what percentage of customers are accepted for these deals. Also, with the majority of cards offering typical rates, of those that are accepted, customers may find they are paying a higher rate of interest once any deal ends.
“It may be worth checking your credit rating before applying for deals as applying for numerous deals and getting rejected will likely cause you problems in the future. “
Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.
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