25% of consumers have missed a monthly repayment on a balance transfer deal
Barclaycard have just announced what credit experts are referring to as “the longest offer in the history of the credit card”, which comes in the shape of their 30-month Platinum balance transfer deal. Many in the credit industry have called this a somewhat risky move on the part of Barclaycard, and this notion is certainly corroborated by new research undertaken by TotallyMoney.com.
Indeed, this research has emphasised the fact that one in four people who have received a long-term balance transfer, have gone on to miss a payment. Unfortunately for the consumer, the terms and conditions of the historic Barclaycard deal, as with most of the 0% transfer deals offered by the majority of card issuers, state that failure to meet monthly payments could mean that the 0% interest facility is removed before the end of the 30-month period. This would leave the consumers in question being forced to pay 18% interest APR, the average default interest rate.
In fact, 24% of the 30.42 million people with credit cards admit to having missed a payment in the last 24 months. This means that a staggering 7.3 million of credit card users flout the terms of their contract with their credit card companies, which obviously has a negative impact on their credit rating.
The research from TotallyMoney.com also shows that 22% of consumers have a balance transfer credit card, for which the average balance is £2167. Yet worryingly, only 33% of the 6.54 million people with these credit cards, have set up a direct debit to avoid missing one of the monthly payments.
CEO and co-founder of TotallyMoney.com, Will Becker, stated that: “it’s great to see the credit card market rife with competitive new deals for consumers”, pointing to the fact that the new Barclaycard Platinum deal. He also expressed concern that customers may not be aware of the pitfalls of defaulting on payments, with specific reference to the 18% default APR.