Many Brits to Change Credit Card Companies in New Year
Millions of Britons say they will change credit card companies in 2008.
New research conducted by MoneyExpert.com indicates that 2.6 million are planning to switch, while 6.6 million report they will stay with their current provider. Those who do not switch will pay an average 16.82 percent interest rate. The study further suggests that many people are discouraged by recent news of credit application rejections.
During the month of January, nearly 7 percent of credit card customers will change providers. Experts advise them to pay down their debt as much as possible during the interest-free period.
Sean Gardner, chief executive of MoneyExpert, warns credit card companies to expect a large volume of changes as Britons recover from their Christmas buying binge and try to work through the “financial hangover” of the New Year.
Mr. Gardner says he is glad to learn that many people are thinking of ways to pay down their debt. Still, he worries that too many will simply add Christmas spending to their debt load. In the long term this will add to their financial woes.
He advises people to cut their borrowing costs as a first step toward containing their debt. After transferring their balance, they should continue to make repayments.
Mr. Gardner warns borrowers to use caution because many balance transfer offers that feature 0 percent interest are accompanied by high transfer fees. A fee of three percent could cost the borrower an additional £60 on a £2,000 debt transfer.
More than 70 percent of credit cards currently offer a transfer deal. Egg and Virgin Money have the longest interest-free period, at 15 months.
Age and geography appear to be a factor in the decision to change credit card companies. Customers in the 25 to 34 age group are most likely to change. Fifteen percent of customers in