According to new research from Abbey Credit Cards, approximately 6.5 million people in the UK will switch credit cards this year; five per cent higher than last year’s figure.
The research shows that around 51 per cent change provider in order to take advantage of balance transfer offers, such as 12-month interest-free periods. Meanwhile, around one third swaps in favour of a cashback deal.
The average balance transferred was found to be £1710, which means around £11 billion will be moved from one provider to another this year.
Managing director of Santander Cards Limited, Roger Lovering, said: “These figures just show the intense competition in the credit card market. With £11 billion at stake, it’s the credit card with the best deal that wins.”
When asked what people were looking for in a new credit card, 29 per cent of respondents said they wanted an interest-free period on new balances, while 19 per cent looked for lower APR rates. A further 6 per cent said they would change to a card with more ’kudos’.
Meanwhile, customers could even stand to make money from credit card cashback offers, particularly in the lead up to Christmas. As long as cardholders pay off the balance in full, 5 per cent interest deals could mean a saving of £25 on the average Christmas present spend (£500).
Therefore, if consumers use zero per cent credit cards to pay for presents and other expenses, while transferring the same amount into a high-interest account and earning cashback, the rewards could be even higher.
Some companies offer cashback on all purchases, such as Capital One’s four per cent cashback on purchases for the first three months, followed by one per cent on an ongoing basis. Others offer more specific deals, such as Abbey’s five per cent cashback deal on supermarket purchases (maximum cashback £50) until January 31.
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