Tuesday 1st of June 2010
Using plastic to make purchases is convenient for people who want to get the latest products immediately, but also an expensive mistake for those with balance transfer cards, new figures suggest.
Information on individual voluntary arrangements (IVAs) could therefore be beneficial for the 63 per cent of such plastic users who were found by moneysupermarket.com to have also used their card to buy something.
These financial products typically offer zero per cent interest on balance transfers, but that all changes once they’re used for a purchase.
According to the price comparison service, buying something worth £50 on a card with an existing balance transfer of £2,500 could cost up to £106 in interest over the year.
And having to pay off mounting debts as well as soaring interest in this way could be enough to put you under.
IVA info may, however, offer a helping hand, showing you it’s possible to freeze the interest on all of your unsecured debts worth more than £15,000 and become completely debt-free.
"It is still worrying that many credit cardholders still make the crucial error on their cards of using them for both balance transfers and purchases," says Kevin Mountford, head of banking at the firm.
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- Number seeking IVA help rises by a fifth
