'Zero interest' credit card deals could go, finds Capital One

13 April 2005
Research commissioned by Capital One has revealed that switching credit card providers to take advantage of 'zero interest' introductory deals is costing the industry billions - and prompted concerns that the deals could be on their way out.

The study, conducted by Professor Merlin Stone of the Bristol Business School, found that credit card customers who continually 'switch' deals in this way are costing UK credit card providers more than £80 million a month.

"Economically, some providers cannot sustain their current offers of zero per cent interest which means they may have to remove them or start introducing new charges to help reduce their losses," Professor Stone commented.

"Card issuers will also increasingly look to find other ways in which to differentiate, the most obvious being the introduction of standard flat rates of interest."

These standard flat rates could actually prove more beneficial to credit card holders than the zero per cent deals, Capital One claims, citing considerable consumer demand for the flat rates.

According to the credit card provider, 61 per cent of credit card holders would prefer a flat rate of interest to having to continually switch deals in order to take advantage of introductory offers.

Indeed, Capital One claims that whilst 4.2 million people may have transferred their balances to new cards in order to try to clear them during the introductory zero interest period, 39 per cent of those were able to do so.

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