Balance transfer merry-go-round is grinding to a halt

Borrowers planning to transfer credit card debts are facing a clampdown by card firms as the number and length of deals are cut, according to new analysis from MoneyExpert.com.

And the independent financial comparison website is predicting the choice will shrink further in the coming months as more card firms withdraw offers.

Over the past year the overall number of zero per cent balance transfer deals has been cut back with 75 per cent of firms now offering deals compared with 82 per cent in October 2007.

Card providers are becoming increasingly cautious about who they lend to and the terms of borrowing they offer. This change of policy has already begun to be reflected in the number of cards offering long balance transfer periods. A year ago there were 103 cards offering balance transfer of 10 months or more, today this figure has reduced to 97.

Across the market the average introductory period has been reduced from 10.1 months to 9.5 as the number of extended deals is reduced. In the past many credit card users, or so called "rate tarts" have used these extended zero per cent periods to transfer their existing debts at little cost but with the number and length of these offers reduced this is likely to become increasingly difficult.

Sean Gardner, Director of MoneyExpert.com, said: "These figures should send a clear message to borrowers that the credit card merry-go-round is grinding to a halt. In the coming months it's going to become increasingly difficult to refinance your debt at zero per cent interest.

"This trend away from extended balance transfer periods underlies a shift in the industry which is increasingly cautious about the people it lends to and is far more interested in the profitability of its customers. A year ago there were dozens of cards with overall APRs of little more than ten per cent, but today the most competitive cards offer rates of sixteen per cent or more."