Rate Tarts Are In A Jam As 2 Million Balance Transfer Applications
on: June 26, 2009, 2:56 am
latest credit card market analysis from uSwitch.com, the independent
price comparison and switching service, reveals that almost 2
million consumers have been rejected for balance transfer deals
in the last year. This represents 57% of all credit card rejections,
forcing these consumers to fork out £535 million in interest
payments in the next 12 months as they are unable to switch to
a new provider. In total, £3.5 billion of credit card debt
is now stuck on interest bearing credit cards as consumers cannot
switch to their next 0% deal.
all types of credit card, more than one in ten consumers, totalling
3.32 million, has had an application declined in the past twelve
months. This is a clear sign that providers are still acting on
the air of caution and only lending to those with a squeaky clean
credit record. This is a huge problem in the credit card market,
particularly for rate tarts. In 2008, consumers carried out an
average of 650,000 balance
transfers every month. For many people, the 0% party really
is over as they have reached a dead end.
a drop in acceptance levels, the number of balance transfer deals
available is also a problem for consumers. There are now 178 balance
transfer credit cards, representing 74% of all credit cards compared
to 204 this time last year. The biggest casualty of this has been
the 10 month deals which have fallen by 83% to just 1 deal.
just one provider, Virgin, offering a 16 month 0% balance transfer
deal, consumers are pushed towards the more popular six month
balance transfer deals which represent a third of the market (33%).
However, with the average balance transfer fee currently at 2.9%
consumers will have to pay £54.09 on the average balance
of £1,846. Unless consumers are planning to pay the credit
card balance during the six month offer period, this could be
a costly way to move money around.
Bond, personal finance expert at uSwitch,
comments: “We can’t ignore the fact that the country
is in economic turmoil – a situation which has been catalysed
by bad consumer credit. The knock on effect for credit card customers
is that those with a less than perfect credit history could find
themselves being turned down for the next best 0% deal, forcing
them to pay interest. This is a huge problem for switchers as
these people have accumulated debt based on the fact they do not
have to pay interest on it.
knock on effect of rejected credit applications is that it will
appear on your credit report and, in the long term, have a negative
impact on your score. With this in mind, it’s important
to check your report before applying for products to make sure
you stand a good chance of being accepted – constantly reapplying
to different suppliers will make the situation worse. If you can’t
get another credit card, think about using a 0% overdraft, an
personal loan or, if there are no other options and debt is
getting out of control, speak to your provider or seek professional
Bond’s credit card tips:
Check your credit
report before making any applications for credit.
If you are rejected for your next credit card, do not any further
applications until you have checked your credit record. Failed
applications for credit will have a negative impact on your credit
You must also close down any credit card accounts you are not
using. The available balance on these accounts will be taken into
consideration when you are applying for a new card.
Missed credit card payments also impact your credit score, the
best way to avoid this is to set up a monthly direct debit for
the minimum payment.
If you are not planning to pay the balance off in full during
the 0% balance transfer period you should consider life of balance
cards. This will provide one low rate of interest for the entire
time the balance is on the card.
Depending on which issuer your balance transfer card is managed
by, you may not be allowed to switch your balance to another card
within the same group. By using uSwitch.com’s balance transfer
tool, you will only be allowed to apply for cards that are available
Contact Details: Tracy North, uSwitch.com 020
7802 2925 / email@example.com
the full version of this press release.
uSwitch.com is a free, impartial online and telephone-based comparison
and switching service, helping consumers compare prices on gas,
electricity, water, heating cover, home telephone, broadband,
digital television, mobile phones, personal finance products and