Capped credit cards on the wane
The number of credit cards with capped balance transfer fees is dwindling dramatically, according to MoneyExpert.com.
The independent financial comparison website says that a year ago consumers could choose from 18 different credit cards with capped balance transfer fees, whereas now that number has dropped to just seven offered by only five different providers.
And with the average balance transfer now as high as £2,666, MoneyExpert.com is warning so-called ‘rate tarts’ with balances of at least £3,000 that they could incur fees of over £100 just to transfer credit to a new provider.
Sean Gardner, chief executive of MoneyExpert.com, said: “Credit card switching is big business. Someone switches a credit card every two seconds and there are very few cards out there that still do not charge a fee for the privilege.
“Consumers looking to move credit card provider will be in for a nasty shock if they don’t choose a card with a capped balance transfer fee – so much so that the process of switching may be entirely pointless if the fee is too extravagant.”
According to MoneyExpert.com the average balance transfer fee is 2.8 per cent of the amount transferred, meaning the typical cost of a balance transfer is some £74.65.
And customers with higher balances could incur much larger fees – a £5,000 balance transfer could cost as much as £150 with a three per cent fee, which is not unusual.
Gardner continued: “In the past the simple advice for rate tarts was to look for a 0% deal, and then for a card with low balance transfer fees.
“Now however with the majority of long term 0% credit cards charging 2% or 3% for a balance transfer, getting a card that caps its fees might be a sensible option if you don’t like the look of one with no fee at all.”