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Spooky Reality of Credit Cards High Balance Transfer Fees

Personal_Finance / Credit Cards & Scoring Oct 31, 2016 - 02:09 PM GMT

By: MoneyFacts

Personal_Finance

Having debt sitting on a card can be a scary thought, particularly if the debt is racking up interest. Borrowers would naturally assume that opting for the longest deal on offer would save them money, however, research from Moneyfacts.co.uk shows that some of longest deals can work out to be the most expensive.


Charlotte Nelson, Finance Expert at Moneyfacts.co.uk, said:         

“Looking at your credit card debt can be a true horror story for some, particularly if you are coming off an interest-free deal and now have to start paying a substantial amount in interest. This is made even more confusing by the wide choice of deals with variable balance transfer fees available, making it difficult to decide which option is the best.

“The longest balance transfer deals on the market are now often compensated by high balance transfer fees, so much so that the average balance transfer fee has increased by 0.13% to 2.34% since the start of this year and is now at a 14-month high.

“The long balance transfer term and high fee favours borrowers with a larger debt who are aiming to clear the whole debt over the deal term. However, these large fees can turn what appears to be a fantastic offer into an expensive one right from the start. For example, opting for the longest deal on the market would cost £75 more in upfront fees than opting for a card with just five months less on its interest-free term.

“With 15 deals on offer without an introductory fee, customers can transfer debt without any cost at all. The longest deal with no introductory balance transfer fee stands at 25 months today, so borrowers with a smaller amount of debt to manage could be significantly better off with this option.

“Borrowers now more than ever will have to do the maths and decide whether they want a trick or treat when opting for a balance transfer card.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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