Interest-free credit cards could be thing of the past

19 May 2005
As credit card companies seek better ways to make money as users switch continually from zero-interest deal to zero-interest deal, credit card users could face charges simply for making purchases. is warning that the traditional practice of not charging credit card customers interest for between 45 and 59 days if they clear their full balance every month is under threat.

The financial comparison service claims that some credit card providers have started to charge interest from the moment a transaction is made using the card, no matter when payment is received - and it expects this practice to spread.

"Credit card companies are struggling to make money thanks to the so-called 'rate tarts' who switch from special deal to special deal. Analysts believe they cost the industry at least £80 million a month or £1 billion a year," said Sean Gardner, chief executive of

He added: "So it's no surprise that firms are coming up with ways to ensure they make some money at least out of their customers. We've seen it with charges for transferring balances and cutting interest-free periods is another way of ensuring they make money."

Mr Gardner did point out that this new type of interest-charging card could actually suit those who usually carry a balance on their card, however, as the rates are actually more reasonable than some others.

"[These cards] will suit some people who regularly carry a balance on their credit card as the rates are among the better on offer," he observed.

But he warned: "It does mean that customers have to be careful when they shop around and be alive to the terms and conditions attached to credit card deals before they take the plunge. Comparing credit cards is becoming more complex and you have to be careful when looking for a new deal."

Click here to find out more about low interest credit cards.

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