As credit card companies hike their rates to an average higher than 17 per cent, customers are finding that they are paying more for their borrowing, but they could save if they switch says Moneyfacts.co.uk.
"As prices continue to rise, many more consumers are seeing their credit card bills increase," said Michelle Slade, analyst at Moneyfacts.co.uk. "Even if you're not one of the people who is having to use your credit card
just to get by each month, the likelihood is that you have been hit by an increase of some sort from your card provider."
The best way to reduce the amount that credit card debt is costing a customer is to do a balance transfer to a more competitive card, Ms Slade said, as there are many zero per cent credit card
deals on the market these days.
They have also become increasingly competitive as most credit card companies now offer this feature, so the length of the special offer has extended to fifteen months in some cases, at which point the cardholder could switch the debt to yet another card if they haven't already paid it off.
Alternatively, for those who will not be able to pay the balance off by the time the introductory period comes to an end, and don't want the bother of hopping from one credit card to another, a better option might be a low rate for the life of the balance.
The difference in interest payments on a debt of £3,000 can be considerable, so choosing the right card is essential.
Ms Slade explains: "The average purchase rate today stands at 17.09% APR. If you switch a £3K debt from this card to the Citi iTunes Rewards MasterCard, you would save £2,516 in additional interest."
However, there are some things to keep in mind, she adds, reminding people that a balance transfer fee often applies, especially on interest free deals, which can be up to three per cent of the balance.
She also warns switchers against making additional purchases on the card, which can be charged at a high rate. Also, the cheapest debt is almost always repaid first, meaning the more expensive debt will stay on the card for longer, accruing interest.
"In recent months we have seen a number of credit cards extending the length of their balance transfer deals." Ms Slade concluded. "At a time when every penny counts, shop around and you could make some superb savings for yourself, rather than lining the pockets of card providers."
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