Credit Card Advice for New Year
“Credit card companies can expect a busy transfer season in January as millions of us wake up to the cost of Christmas before the New Year financial hangover sets in,” said Sean Gardner, Chief Executive of MoneyExpert. Some 2.6 million Brits in fact, are planning to switch credit cards seeking lower rates, in 2008 - according to new research.
Currently, there are 6.6 million credit card users paying an average of 16.82% interest, according to MoneyExpert.com. As the credit crunch begins to shape the future of more people, many will see an increasing number of their credit card applications rejected.
For those 7% of credit card customers who will be able to switch cards in January, many are warned not to enlarge existing debts. The interest-free period that nearly 72.5% of all credit cards offer is an excellent time to pay off debts instead of adding to them – and consumers are being heavily advised to take advantage of the opportunity
“It is good to hear people are taking action but worrying that millions will simply add their Christmas debt to their existing debt. Piling debt on debt is simply adding to the spiral of increasing financial trouble. People should be taking action to get their debt under control and the first step towards that is to cut borrowing costs. The next important step is then of course to pay the debt off but transferring a balance is at least a start,“ offered Mr. Gardner.
Companies such as Egg and Virgin Money offer some of the longest interest free periods currently available at 15 months. Longer interest free periods can reduce debt - however consumers are warned to beware of balance transfer fees on their new cards. A balance transfer fee of merely 3% can cost an additional £60 on a £2,000 debt.
Research showed that 15% of credit card holders in Scotland, 6% in London, and 7% in the south-east are among the group of credit card users between the ages of 25 and 34 most likely to attempt to switch cards in January.