Credit Cards: Fewer Lenders Offer 0% on Balance Transfers

By: Mark Lauterwein

The credit crunch might sound like a breakfast cereal but it is still proving pretty unpalatable to those looking to save money by transferring their card balance. There are currently just nine cards that offer a 0% deal lasting 10 months or more. A year ago there were 200.

Around 716,000 customers change over to a new card every month in the UK. Typically the balance is round the ?1500 mark. In view of the current uncertainty afflicting the lending market, it is unclear how many will be permitted to carry on doing this. Plainly, the reason people want to switch providers is all about saving money on interest payments. For example, a balance in the region of ?2000 would inevitably yield interest payments of at least ?40 a month. That is a big chunk of what a typical borrower could afford to pay back each month. It is not difficult to see how the interest payments therefore extend the term of many loans.

Yet credit cards offering 0% rates are becoming harder to find as lenders rein in on their largesse. Some truncated 0% terms last as little three months. Another cost factor bound up with switching credit cards is the transfer fee. Clearly the customer has to calculate and compare how this transfer fee looks set against the sum of interest payments to be made were he not to switch. The best value credit cards can be sourced online and there are a number of specialist portals that can help here. It is a straightforward way of finding the best deal.

14/4/2008

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