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Borrowers Could Be In For 'Nasty Shock'

Mar 6, 2008
Those consumers who are taking steps to reduce pressure on their finances could actually find such moves do more damage to their pockets, it has been suggested.

In research carried out by MoneyExpert, it was revealed that the number of credit cards which have a capped balance transfer fee available to borrowers is falling. At present there are only seven different cards with such a feature, down from the 18 recorded this time last year. Findings from the firm also indicated that the average balance shifted stands at 2,666 pounds.

At the moment the average balance transfer fee is equal to 2.8 per cent of the total amount that borrowers are looking to shift - the equivalent of some 74 pounds 65 pence. However, it has suggested that those transferring a higher balance are much more likely to face increased charges. MoneyExpert suggested that people wanting to move 5,000 pounds may be hit with a three per cent fee, about 150 pounds.

And whether they are being hit with high transfer charges or are on an offer with an expensive rate of interest, an uncompetitive credit card deal could put pressure on borrowers' ability to meet other financial demands. Such areas could well include UK loan repayments, household bills and council tax costs.

Research by the price comparison website also indicated that an increasing number of Britons switched credit cards over the second half of last year. During the last six months of 2007, some 13 per cent of people with such borrowing products moved supplier in an attempt to secure a more competitive deal, up from the 12 per cent recorded between January and June. Such an increase accounted for some 394,000 people.

Sean Gardner, chief executive of MoneyExpert, said: "Credit card switching is big business. Someone switches a credit card every two seconds and there are very few cards out there that still do not charge a fee for the privilege. Consumers looking to move credit card provider will be in for a nasty shock if they don't choose a card with a capped balance transfer fee - so much so that the process of switching may be entirely pointless if the fee is too extravagant."

Among those credit cards which have capped transfer costs, five limit such a charge to 50 pounds. However, less than half of these carry introductory zero per cent offers. Meanwhile, it was revealed that although more than 60 credit cards do not charge such a fee, "only a handful" of these have zero per cent balance transfer deals.

For those looking for an effective way to get to grips with their money, applying for a debt consolidation loan might be a wise idea. Taking out a cheap debt consolidation loan could allow borrowers to quickly pay off a number of expensive credit cards, so leaving them with a single low-cost payment to make each month. Such a cheap UK loan could prove to be of assistance to many Britons after a recent consumer confidence study carried out by Nationwide revealed that, last month, the nation's financial outlook index stood at 81. Such a figure was the lowest ever recorded by the firm.
About the Author
Abbi Rouse writes for AllAboutLoans.co.uk, an online loans comparison site, visit us today for information on all loan topics including cheap loans applications and loans sourcing from all leading UK providers.
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