Interest-free credit cards cost Brits £1.7bn

Britons not switching away from interest-free credit card balance transfers in time have been charged £1.7 billion in interest in the last two years.

Almost one credit card holder in five (18 per cent) does not move their balance when their interest-free special offer ends, research from comparison service Moneysupermarket.com reveals.

These people face a stiff financial penalty, with the average rate charged to people once their zero per cent deal expires at 16.46 per cent.

And it is not a matter of days that Britons spend paying interest before they switch providers, with the average amount of time card holders delay before moving to a new low-interest deal at seven months.

"Balance transfer cards offer a sensible way for borrowers to manage their debt, and wherever possible people should try to clear their balance during the zero per cent offer period," said Robert Kenley, head of credit cards at Moneysupermarket.

"However, our research shows only 15 per cent of borrowers actually manage to do this."

Additionally, Moneysupermarket is concerned about the number of Britons shifting balances between different balance transfer deals, rather than paying off their debts.

"In these times of increasing consumer debt it is even more worrying that more than a third of people simply just transfer that balance onto another card, churning the debt round with little expectation of ever clearing it completely," Mr Kenley commented.

"Indeed, so called 'rate tarts', who continually switch from one card to another, will no doubt find this increasingly difficult to do as the banks seek ever more innovative ways to claw back the money on which they lose out by offering these zero per cent deals." XXX