Zero per cent costs for one in three credit card customers

More than one in three credit card customers do not clear their debts or believe they will not clear them despite taking out zero per cent balance transfer deals, according to new findings from Consumer Intelligence.
 
Fierce competition in the credit card market has seen zero per cent deals lengthen to as much as 29 months as providers fight for customers but Consumer Intelligence is urging applicants to plan carefully before transferring balances.
 
Its study shows around two-fifths of credit card customers – equivalent to 11.2 million UK adults – have applied for zero per cent balance transfers in the past two years as the length of zero per cent deals has gone up and up.
 
However, 34% of people who successfully applied for a balance transfer either failed to clear their debt or believe they will not before the end of the agreement. The research found 22% had not cleared their debt and another 12% who are still paying the balance off believe they won’t succeed. On average they will be left with a balance of £2,400 at the end of their deal.
 
Around 20% saw their 0% introductory rate balance transfer terminated during the introductory period – mainly because they were late with a payment or missed one entirely.
 
David Black of Consumer Intelligence said: “Zero per cent balance transfer deals can be a significant help for people trying to cut debts and interest rate charges and the longer the deals become the better they are for customers although it’s worth taking account of the balance transfer fee.
 
“But it is clear that substantial numbers of customers are still not able to clear debts despite deals becoming longer and longer and those who fail to stick to terms and conditions can lose out.”
 
The study found 40% of those saw their 0% deal ended early were late making a monthly payment while 21% missed a payment entirely and 10% paid less than they were meant to. 6% exceeded the card’s credit limit but the worrying number is the further 23% who claimed to not know why the terms and conditions changed.