Brits wasting £2.3 billion in credit card interest
Credit card users are wasting £2.3 billion a year in interest payments by simply letting debt sit on their existing credit card. Research from moneysupermarket.com has found almost half (46 per cent) of credit card users do not pay off their credit card in full, with the average debt being held for 10 months before being paid. With three per cent of cardholders paying just the minimum balance each month - credit card users are accruing billions of pounds in unnecessary interest.
The research also found two thirds (64 per cent) of credit card users have never transferred an existing balance onto a zero per cent balance transfer card. Shockingly almost a quarter (24%) claimed they could not be bothered to switch, did not understand how or did not know they could. If these borrowers considered swapping their existing debt onto an interest free product, they could save themselves £279 in interest over 12 months.
Kevin Mountford, head of banking at moneysupermarket.com commented: "As the nation's wallets continue to be squeezed by higher living costs, it is crucial consumers look to pay off their debt quickly and efficiently to prevent additional interest from accruing. Anyone with an outstanding balance on their card should consider switching to a product offering zero per cent interest on balance transfers such as Barclaycard's Platinum credit card or Nationwide's new credit card, both offering 17 months interest free.
"Our research shows around one in five credit card users (17 per cent) are worried or very worried about their debt. Switching to an interest free product is a simple step that can help consumers save money on interest payments, meaning they can pay off their debt quicker. However, switching to the best zero per cent credit cards may not be possible for those with a less than perfect credit score. If you are in this situation and have a debt you need to shift, you need to looks at all of your outgoings and try and get a target for paying your debt down. The longer to take to pay off your balance, the more it will cost you in interest.
"Anyone looking to switch cards should always check which card is most suitable for their personal circumstances as different lenders will treat each applicant differently. moneysupermarket.com has introduced a credit profiling tool that helps people search and apply for the most suitable credit card based on their own credit profile. By matching an applicant in this way, their chances of being accepted for suitable credit improves and the tool helps reduce the risk of damaging their credit score by being rejected for an unsuitable product."