Britons warned ‘loyalty costing you hundreds’: Millions could save over £1k by switching
As debt awareness week approaches, Britons who may be struggling to keep up with rising costs are reminded there is help available which could lead to savings of over £1,000 a year. One way people can keep their costs down, and create some relief is by using balance transfer cards.
Some 15.6 million Britons could save over £1,000 a year as credit card spending grows at its highest rate since 2005.
Experian data suggests that 15.6 million active cardholders in the UK may be eligible for a zero percent card, including zero percent purchase cards and zero percent balance transfer cards.
By switching to more competitive cards, the consumer could save over £1,000 a year on interest payments.
Two-thirds (68 percent) of consumers could save over £1,000 a year on interest payments if they switch to more competitive credit cards.
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This comes after the Bank of England revealed that in January the annual growth in credit card spending grew at its greatest rate since October 2005.
Despite credit card borrowing increasing by 13.5 percent compared to last January, the highest level of annual growth since October 2005 (13.7 percent), it has mainly been on existing cards, suggesting that many are sticking to their existing cards rather than shopping around for opportunities to save.
According to Experian data, consumers’ loyalty to their current lenders could be costing them hundreds of pounds a year in potential savings.
Over two-thirds (68 percent) of customers may be eligible for zero percent cards, which could help them save more than £1,000 on interest payments.
How could people save £1,000?
The Money Charity estimated in November that each UK household has an average credit card debt of £2,290.
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A customer with this balance could save £844.85 by shifting their existing balance onto a zero percent balance transfer card.
They could also save a further £333 in interest by putting their new spending of £1,000 on a zero percent purchase card.
This would give them a total saving of £1,177.85 on interest payments per year.
There are currently 49 zero percent balance transfer card deals, six zero percent purchase cards and 17 cards that offer zero percent on both balance transfers and purchases on Experian’s marketplace, with up to a maximum of a 31-month zero percent interest period.
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James Jones, head of consumer affairs at Experian said: “Our data suggests that many of our customers are eligible for zero percent cards which could help those with existing borrowing ease the squeeze on their purse strings.
“When used responsibly, zero percent cards could make repayments more affordable, either by reducing the amount you spend on interest or enabling you to clear your debt sooner.
“While there’s often a fee associated with the switch, you won’t need to pay interest for a period of up to two years, meaning every penny goes towards paying what you owe.”
Using credit to pay for everyday essentials is not recommended unless people can clear the balance at the end of the month.
If someone is struggling to repay credit or other bills, Experian recommends contacting a free, impartial debt advice service such as National Debtline, Citizens Advice or StepChange.
Talking to a debt adviser will not affect someone’s credit score.
When used responsibly, zero-percent cards can make repayments more affordable.
Shifting existing borrowing onto zero percent cards can help reduce the amount peo[;e spend on interest or enable them to clear their debt sooner.
Published at Sat, 18 Mar 2023 14:37:00 +0000