Avoid these simple credit card mistakes to keep 0% deal
One in five Brits who’ve taken out a balance transfer card in the last five years to reduce their debt have fallen foul of the terms and conditions, meaning they’ve lost the promotional deal early and paid more interest as a result.
A fifth of the 14.4 million Brits who’ve taken advantage of a zero percent balance transfer credit card offer have made costly mistakes, adding £948m in annual interest charges, research by The Co-operative Bank shows.
Generally, the terms and conditions on balance transfer cards allows the lender to remove the zero percent promotional offer if a customer makes a late payment, misses a payment or goes over their credit limit.
The Co-op research found that 37% of credit cardholders had made one of these mistakes and on average, consumers who lost the zero percent deal did so within five months of the deal.
However, 7% didn’t even receive the benefit of a promotional offer at all due to making a mistake straight away.
When it comes to consumers’ awareness of the terms and conditions attached to the promotional rates on balance transfer cards, almost a third of cardholders who have, or have had, a balance transfer card weren’t aware that the card provider could remove the promotional rate if they missed a payment, while 31% were unaware it could be removed if they exceeded their credit limit.
The study revealed 20% of people who have lost a promotional offer took out a loan to meet their repayments, 37% dipped into their savings to cover the rising cost and 26% turned to their overdraft.
Matthew Carter, marketing and communications director at The Co-operative Bank, said: “Now is a prime time to review household finances as we start the New Year. A balance transfer credit card is an effective way to manage debt and cut the cost of borrowing by consolidating outstanding credit balances into one repayment, yet, our study shows that many cardholders never really benefit from these headline promotions as small mistakes can prove costly. It is all the more galling when you have paid a fee to transfer a balance to a card, only to see the benefit you paid for being removed.”