Thursday, Aug 28, 2008
End of 0% deals means more belt-tightening ahead
Express (sorry): Card costs are set to rocket
THOUSANDS OF credit-card holders now enjoying interest-free borrowing face a payment shock this autumn when their introductory periods expire and hefty interest bills kick in. Between April and October last year, 5 million people switched their debts to a credit card provider offering a temporary interest-free period, says new research. This means millions of 0 per cent balance transfer deals are now on the verge of expiring. Stricter lending conditions, imposed because of the credit crunch, mean thousands of these customers will struggle to switch the debt to another 0 per cent offer because they cannot count on being accepted by a new card provider. So when the deals end, borrowers may have to meet much higher repayments, with interest charged on top of the money they already owe.
6 Comments
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1. bystander said...
surely these people will simply move the balance to another credit card offering 0% interest for 14/18 months? I do not see how this will cause problems, unless the banks stop offering these new cards at 0% introductory offers on all balance transfers.
2. bystander said...
sorry drewster , miss-read your introduction, ignore the above
3. techieman said...
bystander - actually even though you may have had a point re moving the balance (and i realise per above that may be theoretical anyway), transfers used to be "free" but in the last couple of years they have had a fee of anywhere between 1-3% of the amount being transferred. Even so if the 5mil is right thats an impressive number of people desperate enough to pay this switching charge. Another nail.......
4. jack c said...
The "revolving debt" game is effectively coming to an end - there are several people I know who went on expensive holidays which they financed by credit card and subsequently swapped from one card to another via balance transfers thus deferring the debt payment. They key in all of this is that they were deferring the debt - and not escaping from paying the debt. The alternatives of consolidating via an unsecured loan or possibly adding to the mortgage have also now all but disappeared.
5. renting2 said...
Wonder how much of these increasing balances carry debt for food, mortgage payments, utilities etc.
6. stillthinking said...
I just got refused for a NatWest visa. I suppose I should thank them for saving me from myself.