Credit card shuffle continues as switching rises

More than 5.9 customers switched credit cards in the past six months as consumers battled to get debts under control, according to MoneyExpert.com.

The independent financial comparison website says some 394,000 more people switched cards in search of better deals during the second half of last year compared to the first six months – 13 per cent of credit card customers moved provider in the past six months compared to 12 per cent in the first half of 2007.

MoneyExpert.com says young card holders are finding it hardest to deal with stretched finances, with around one in six 25 to 34 year olds (17%) saying they have had to switch provider in the second half of 2007.

The rise in credit card switching is further evidence of a slowdown in consumer spending as concern about the economy mounts, MoneyExpert.com believes. The website says so-called ‘rate tarts’ are here to stay as long as credit card companies offer lengthy balance transfer deals.

Sean Gardner, Chief Executive of MoneyExpert.com, said: “The increase in credit card switching means that people are concentrating more on reducing debts and are less concerned about other product areas.

“And with bills increasing across the board it wouldn’t be a surprise to see further rises in credit card switching in the next six months as consumers struggle to cope.

“Credit card companies still offer lengthy zero per cent deals – some as long as 15 months – which means that so-called ‘rate tarts’ will be here to stay.

“The worry is that consumers will see a zero per cent deal as a chance to service debt rather than repay debt. That is a precarious situation as sitting on debt often leads to spending more elsewhere.

“It will almost certainly be the case that everyone can save money by switching – or at least stave off hefty interest payments – and we would urge consumers to continue to seek out the best deals.”

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.