Unlimited balance transfer fees are now the norm, says MoneyExpert.com
Just one in eight credit cards cap the fees they charge customers transferring balances to them as firms start to cut back on cheap debt, new research* from the independent comparison website MoneyExpert.com shows.
Analysis reveals only 17 of the 133 standard credit cards that accept balance transfers set a limit on the fees ñ typically between £30 and £50 – for customers switching debts to them with the majority now imposing unlimited balance transfer fees.
Maximum fees now go as high as three per cent ñ nine cards ask for three per cent on balance transfers ñ with the average at 2.1 per cent. That can means a customer switching a £5,000 balance will be charged on average £105 and as much as £150 if they move for a cheaper deal. And for people with heavy debts the lure of an interest-free switch could prove costly. An uncapped £10,000 transfer could cost as much as £300.
Sean Gardner, chief executive of MoneyExpert.com, said: ìPlaying your cards right is becoming more and more difficult as credit card providers raise the stakes on balance transfers.
ìThe days of easy credit and companies falling over themselves to allow customers to switch between cards are over. Rate tarts are being forced to raise their game as providers take a tougher line."
It can now make sense to look for a long-term low rate on balance transfers rather than just switching and switching again and ending up paying transfer fees every time. Borrowers need to do their sums before they make a move. Several cards including Citibank and Intelligent Finance offer rates of 4.9 per cent until the balance is cleared.
ìThe card firms have seen the penalty fees they can charge cut and have suffered as bad debts have piled up. They are increasingly taking money back through other means and unlimited balance transfer fees are just one method.”
The lowest balance transfer limits are from Yorkshire Bank and Clydesdale which set a £30 maximum. Up to that level they charge a two per cent transfer fee. Morgan Stanley charges one per cent on its Cashback and Platinum cards but sets its limit at £50. Others which cap transfer fees at £50 include Leeds Building Society, Virgin Money, John Lewis, Yorkshire Building Society, Debenhams, ASDA and the GM Card.
Providers which charge three per cent for balance transfers include the AA, Halifaxís Cancer Research, NSPCC and One cards, Bank of Scotlandís One card and Amazon. SkyCard charges 2.99 per cent.
Compare 0% balance transfer credit cards
* Source: Defaqtoís Aequos database