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January 17, 2014

One in three credit card customers not clearing debts – Consumer Intelligence

More than one in three credit card customers in the UK do not clear their debts or intend to, despite many negotiating 0% balance transfer deals, according to research from Consumer Intelligence.

By Angelo Boccato

More than one in three credit card customers in the UK do not clear their debts or intend to, despite many negotiating 0% balance transfer deals, according to research from Consumer Intelligence.

Some 0% interest on balance transfers deals are being extended to as much as 29 months due to increased competition between the cards providers.

David Black of Consumer Intelligence said: "0% balance transfer deals can be a significant help for people trying to cut debts and interest rate charges and the longer the deals become the better they are for customers although it’s worth taking account of the balance transfer fee.

"It is clear that substantial numbers of customers are still not able to clear debts despite deals becoming longer and longer and those who fail to stick to terms and conditions can lose out."

A spokesperson for Barclaycard said: "We make clear the credit history needed from the outset and our ‘eligibility checker’ tool allows customers to check whether they are likely to be accepted in full, before they apply."

Around 11.2m customers have applied for 0% balance transfers, but 34% of the successful applicants have not cleared their debt and another 12% are still paying the balance. On average the customers will be left with a balance of £2.40 ($3.94) at the end of their deal.

According to the study, 40% of the customers who reached the end of their deal were making a delayed monthly payment, the 21% missed an entire payment, with 10% paying a lower amount than they had expected.

While 6% of card users exceeded the card limit, 23% of all the customers involved claimed not to know the core reasons for the change of the terms and conditions in such deals.

 

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