Less than than ¼ of transferred credit card debt paid during 0% interest periods
With less than a quarter of transferred credit card debt being paid by borrowers during the interest free period, M&S Money are urging them to look beyond short-term interest free deals.
More than half of credit card holders have now transferred balances with an average of £2,763 being transferred. 75% of this debt is still owed on cards at the end of any introductory interest free period and only one in three borrowers using transfer deals manage to repay debts during the initial interest free period.
The latest research from Marks & Spencer Money shows that over half of Britain’s credit card borrowers have switched balances to a card with a cheaper rate at least once. The research indicates that balance transfers are being used as a way of delaying repayment rather than as a chance to pay debt off more quickly – as just one in three borrowers transferring balances clearing debts by the time their new card goes to the standard rate.
The research showed that the amount men and women repay differs with men making larger balance transfers being worse at repaying them. The research showed that the average amount of debt transferred by men was £3,152 compared to women’s £2,405. The average percentage repaid during the interest free period is 17.5% by men and 27.7% by women.
Eddie Nott, deputy chief executive of Marks & Spencer Money commented, ‘Britain’s borrowers have caught the balance transfer bug, however the majority are not making the most of their low interest deals and clearing their debt. We urge borrowers to opt for lifetime balance transfer offers unless they are confident they will repay their borrowings while it’s cheaper to do so.’
A debt consolidation loan is one alternative to paying off credit card debts. Usually secured on your property, a debt consolidation loan will wrap several monthly repayments into one. Multiple payments would no longer need to be juggled with a debt consolidation loan you’ll know the exact date payment will be taken each month. Unlike balance transfers, a debt consolidation loan will clear existing balances immediately.
It is however important to remember with a debt consolidation loan, repaying borrowing over a longer term may increase overall interest charges.
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