Britons could save more than £1,500 by making credit card balance transfers to avoid mounting debt interest rates, new research reveals.
Analysis from TotallyMoney shows that nearly half of credit card customers could benefit from transferring their balances to different providers.
The findings come as credit card debt continues to rise, with total borrowing increasing by 6.6 per cent over the past year.
Almost half of credit card customers – 49.4 per cent – are currently paying interest on £33billion worth of borrowing, highlighting the scale of potential savings available through balance transfers.
Recent competition between providers has led to the most attractive balance transfer deals since April 2023, with two banks now offering 31-month terms.
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Britons are being urged to switch credit card balances to save money
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Last January saw a surge in credit card balance transfers, with 853,000 customers moving their debts to new providers, according to UK Finance.
This represented a 19 per cent increase compared to the monthly average throughout the rest of the year.
The process allows eligible customers to move existing credit card debt to a new provider for a small fee, typically between two to four per cent of the transferred amount.
In return, customers can benefit from interest-free periods on their transferred balances. Two providers are currently offering market-leading 31-month deals, with MBNA charging a 3.2 per cent transfer fee and Barclaycard requiring 3.45 per cent.
In the New Year, households are reviewing their finances
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For customers carrying an average balance of £2,916, the MBNA offer could lead to savings of £1,533, while the Barclaycard option would save £1,526.
Alternative options are available for those seeking different terms. Barclaycard offers a zero-fee balance transfer deal over 14 months, which could save customers £734.
For those with less than perfect credit scores, Virgin Money provides a 16-month balance transfer option.
Fluid also offers a 9-month balance transfer deal for customers with lower credit ratings than most borrowers.
TotallyMoney CEO Alastair Douglas said: “January’s a great time to get your finances in shape, so you can start the year on the front foot.
“With two banks now offering up to 31 months, you could press pause on interest payments until August 2027.”
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Interest rates on credit cards have reached new highs in recent years
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Douglas emphasises that finding out eligibility “doesn’t take long, and it could save you hundreds if not thousands of pounds”.
“Shop around, and keep your eyes peeled for offers which come with pre-approval, guaranteed credit limits, guaranteed rates, and guaranteed zero per cent offer durations,” he recommends.
These guarantees are important because they ensure customers know exactly what they’ll receive before applying.
“That way you’ll know if you’ll be accepted before you apply, and you can be totally sure that you’ll get exactly what was advertised,” he explains.
