Millions of credit card users on course for rate trap as they fail to move provider
- Around 17million people nationwide have never switched their card
- A typical 0 per cent deal lasts 18 months
- Apathy is one reason for failing to switch to a new 0 per cent deal
Millions of credit card customers – especially those lured in by a bargain introductory rate as low at zero per cent – are paying well over the odds because they have failed to move provider.
New research reveals that nearly half of all UK credit card holders –around 17million people nationwide – have never switched their card.
With a typical 0 per cent deal lasting 18 months, after which customers are then automatically rolled on to their provider’s standard rate, many will now be paying an average rate of 20 per cent – or in some cases as much as 30 per cent.
Around 17million people nationwide have never switched their card
Credit card holders must meet a minimum payment requirement each month to avoid defaulting. But more than a third routinely fail to pay off their balance in full.
With a balance left on their card the interest can soon ratchet up, making it harder to pay off the outstanding debt.
The research, by comparison service Comparethemarket, says apathy is one reason for failing to switch to a new 0 per cent deal – with one in five saying they cannot be bothered to transfer. Others – more than one in ten – say they are put off because of fears they will not be accepted by a new provider.
By contrast, the top three reasons why people do get around to moving credit cards are because their card’s interest period was coming to an end, they wanted to get cashback or another reward, or they found a card that offered a longer balance transfer period to help them spread the cost of paying off their card debt.
John Crossley, a director at Comparethemarket, says the switching culture prevalent in the financial world seems to have passed many card borrowers by.
He says: ‘The UK has woken up to the money saving benefits of switching energy tariff and insurance, so it’s surprising more people aren’t doing the same when it comes to their credit card – particularly when the cost of rolling on to a default interest rate is so high.’
Although the number of long-term 0 per cent deals has diminished, there are still plenty of offers with no interest to pay.
Crossley says: ‘Switching between providers is a relatively quick process but it is worth reviewing the different kind of credit cards available before making a decision.
‘Online tools can help you check your credit score without damaging your credit rating and ensure you are on the best deal for your financial circumstances.’
THIS IS MONEY’S FIVE OF THE BEST CREDIT CARDS