Average rate at end of zero per cent deal is now 16.1 per cent.
Credit card companies have hiked the interest rates they charge customers whose zero per cent balance transfer deals have expired, new analysis from MoneyExpert.com* shows.
The independent financial comparison website says the average standard APR on balance transfers has increased from 15.35 per cent January this year to 16.1 per cent now – a rise of 0.75 percentage points.
According to MoneyExpert.com there are currently 180 zero per cent introductory balance transfer credit card deals on the market with an average introductory offer period of almost 10 months.
However MoneyExpert.com is warning credit card customers to check the terms of their current deal as providers look to increase their charges on balances that remain after the end of the zero per cent offer.
While the average ‘go-to’ rate is currently 16.1 per cent, some 23 credit cards charge 18.9 per cent or higher. Northern Bank’s Platinum Credit Card charges a punitive 39.6 per cent on balance transfers once its zero per cent deal ends.
Sean Gardner, director of MoneyExpert.com, said: "Credit card companies continue to offer good, lengthy zero per cent deals on balance transfers, and customers should continue to take advantage of them."
"However part of the consideration process should be the go-to rate, particularly as more and more people will not be in a position to clear their balance in full once their deal expires. As money is tight, paying off the credit card is more difficult and that means you’ll have to rely on the standard APR of your credit card provider, or of course switch again."
Recent research by MoneyExpert.com revealed that around 1.8 million credit card customers have had their credit limit reduced in the past year by their card provider, with the average reduction around £1,600**.
And the latest findings are yet more evidence of the clampdown by credit card companies on customers.
MoneyExpert.com says that regularly reviewing providers for a range of services is good practice but warns consumers that it might not always make financial sense to switch.
MoneyExpert.com offers a unique service which enables people to find the financial products which best meet their specific needs, and which they are more likely to be successful in being accepted for. It includes exclusive research conducted by MORI, which reveals providers’ service levels. This information is married up with a financial database which lists the products suited to the customer. For the first time, people can review a product’s price, features and also the level of service offered by the provider to enable them to make a more informed choice.
MoneyExpert.com aims to demystify the complex world of personal finance, and to help inform customers of the choices available. The service can be found at www.moneyexpert.com
*MoneyExpert.com research, 04.06.08 and 04.01.08
** Online Research carried out by YouGov who interviewed 2,125 GB adults (18+) between 19th and 21st December 2007. Grossed up using ONS statistics on no. of households and adults in Great Britain.
** Bank of England, 03.04.08