New year, new credit card for 2.6m

Some 2.6 million Brits are planning to switch credit cards in 2008, according to new research.

However, 6.6 million will be sticking with their current cards and paying an average of 16.82 per cent interest, according to MoneyExpert.com figures released today, with many put off by stories of credit card rejections rising as the credit crunch bites.

In total seven per cent of all credit card customers will be switching cards over January – but people are being urged to use any interest-free period as a chance to pay off debts and not enlarge them.

"Credit card companies can expect a busy transfer season in January as millions of us wake up to the cost of Christmas before the New Year financial hangover sets in," said Sean Gardner, chief executive of MoneyExpert.

"It is good to hear people are taking action but worrying that millions will simply add their Christmas debt to their existing debt. Piling debt on debt is simply adding to the spiral of increasing financial trouble.

"People should be taking action to get their debt under control and the first step towards that is to cut borrowing costs. The next important step is then of course to pay the debt off but transferring a balance is at least a start."

Those looking to switch to a 0% credit card deal are being urged to watch out for the balance transfer fees – which at three per cent could cost £60 on a £2,000 debt.

Currently the longest interest free periods on offer are 15 months with Egg and Virgin Money – although 72.5 per cent of all credit cards offer some sort of transfer deal.

Credit card customers aged between 25 and 34 are the most likely to switch credit cards in January, and 15 per cent of customers in Scotland plan to do the same – compared with six per cent in London and seven per cent in the south-east.