Tuesday 5th of January 2010
In the first three months of 2010 £3.2 billion will be moved to new credit cards as people try to lessen their unsecured debt, a new survey shows, although repaying balances through an individual voluntary arrangement (IVA) could be more ideal for the long term.
The average balance to be transferred will stand at £1,140 in order to take advantage of introductory balance transfer rates, Santander Cards reports.
But if you have a number of credit cards, as well as personal loan repayments, transferring to a new card may not make a big enough dent in what you owe.
Instead, repaying credit card and personal loan debt through an IVA can freeze the interest rates for the long term, unlike simply transferring a balance which will have zero per cent rates for a few months only.
People under the age of 55 are more likely to transfer their balances between credit cards, the survey shows. However, credit card owners could find an IVA answers their growing interest concerns.
"The number of people transferring balances has risen year on year, whilst the amount being transferred has fallen dramatically; this is a clear sign that consumers are becoming savvier when it comes to managing their finances," says Emma Roberts, director at Santander Cards.
By Kim Parsons
- 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
- IVAs can freeze high interest rates on loans
