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18 Oct 2019

News

Switch and save on credit cards

Michelle Slade, analyst at Moneyfacts.co.uk, comments:

“As prices continue to rise, many more consumers are seeing their credit card bills increase. Even if your’re not one of the people who is having to use your credit card just to get by each month, the likelihood is that you have been hit by an increase of some sort from your card provider.

“If you now find yourself with a debt on your card and you want to cut down your monthly repayments, the best option is a balance transfer.

“The majority of the cards on the market come with a 0% balance transfer deal for a period of between three and fifteen months. Alternatively, if you don’t want to keep switching cards and can’t pay off the debt during the term of the introductory deal a life of balance card may be more suitable.

 

Card

Balance Transfer Deal

Purchase APR

Minimum Repayment

Total Interest Payable on £3K debt

Repaying Minimum

Repaying £75 pm

Repaying £100 pm

Average Card

17.09%

2.5%, min £3

£3,121

£1,216

£783

Virgin Money MasterCard

0% for 15 months

15.9%

3%, min £25

£941

£327

£147

Citi iTunes Rewards MasterCard

4.9% for the life of the balance

17.9%

2.25%, min £5

£605

£261

£188

Source: Moneyfacts.co.uk 11.8.08

 

“The average purchase rate today stands at 17.09% APR. If you switch a £3K debt from this card to the Citi iTunes Rewards MasterCard, you would save £2,516 in additional interest.

“There are a couple of things to bear in mind when selecting a balance transfer card:

  • Unless you live in Northern Ireland, you will have to pay a balance transfer fee on 0% cards. This can be up to 3% of the amount of debt you transfer.
  • Don’t use the card to make additional purchases. Most credit cards repay the cheapest debt first, meaning that any new debt will stay on the card longer, accruing interest.

 

“In recent months we have seen a number of credit cards extending the length of their balance transfer deals. At a time when every penny counts, shop around and you could make some superb savings for yourself, rather than lining the pockets of card providers.”

Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry. 

 

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