Research by TotallyMoney, a UK credit comparison site, has warned consumers against viewing 0% balance transfer deals as unconditionally good deals.
Barclays’ release of Barclaycard Platinum, a credit card offering the UK’s longest transfer deal (30 months), sparked enthusiasm in a market buoyed by rising consumer credit borrowing.
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But with recent figures revealing over a fifth of British consumers in 2013, up from 17% in 2012, intend to borrow money for their Christmas spending, and 15% relying on credit cards to do so, TotallyMoney is warning against unchecked borrowing.
The website’s research found that one in four users of long term balance transfer deals had missed a monthly repayment, often leading to a loss of the 0% balance transfer before the end of the offer, as well as a negative impact on their credit rating.
TotallyMoney reported: "Across the credit card market, a total of 7.3m (24%) credit card holders admit to missing credit card payments in the last two years."
The report also found that ‘more than one in five consumers (22%) hold a balance transfer credit card with an average balance transfer of £2,167.
"With more than 6.5m balance transfer credit card holders, just 33% of these have a direct debit in place to ensure they never miss a monthly payment."
With the default purchase APR totalling at 18%, it concluded, the longest deal may not always be the best.
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