Britons being hit by punishing interest rates on credit card balances can save as much as £1,420 and turn around their finances, according to new research.
Currently half – 49.2 percent – of all credit card customers are paying interest on their borrowing every month with many paying sky-high interest rates of more than 30 percent.
However, switching balances to a new card which charges no interest would allow them to pay down the debt over as long as 29 months and make massive savings at the same time.
The number of these balance transfer card deals has come down from 73 to 58 over the past two years, while the fees have crept up from an average of 1.99 percent to 2.42 percent, however there are still significant savings to be had.
TotallyMoney research found that somebody who is currently paying interest on the average interest-bearing balance of £2,916 each month could save £1,421 by taking advantage of the market-leading 29 month balance transfer from Virgin Money. Although the deal comes with a hefty transfer fee of 3.45 percent.
A card with NatWest would offer the same typical customer an interest rate saving of £682 assuming the balance was paid down over 13 months. And, on the positive side, there is no balance transfer fee.
Another Virgin Money deal offering a balance transfer fee of 3 percent and a 16-month repayment period would save a credit card user with an average balance some £752.
TotallyMoney chief executive, Alastair Douglas, said: “Anybody paying interest on their credit card debt each month should check their eligibility for a 0 percent balance transfer offer.
“It’ll mean you can stop paying interest for up to 29 months and focus on repaying your debt. It’ll help you get your finances in order and you could save you hundreds, if not thousands of pounds.”
He added: “The best offers will usually only be available to people with the best scores, so download a free personal finance app which gives you access to your credit report.
“It should also provide you with a personalised plan to help you improve your score and unlock the best borrowing options. It might take some time, so take action as soon as possible, because you never know when you might need it.
“When applying, you should always shop around for the best deals, and look out for offers which come with pre-approval, guaranteed credit limits, guaranteed rates, and guaranteed 0% offer durations. That way you’ll know if you’ll be accepted before you apply, and you can be totally sure that you’ll get exactly what’s advertised.
“It’s also worth remembering that a balance transfer is designed to help you stop paying interest, and it’s likely that you’ll be charged for using it for making purchases or withdrawing cash from the ATM. If you need access to both a 0 percent balance transfer, and 0 percent purchases, then check to see if you’re eligible for any combo cards.”
“Our free personal finance app gives you access to both your credit report and open banking data, and makes it work for you, not against you. We’ll tell you what’s holding you back, and the steps you can take to improve your score and unlock the offers. And we also notify you when your current 0 percent introductory offer has ended, so you can shift to a 0 percent balance transfer and avoid paying interest.”
