Martin Lewis breaks down
Martin Lewis regularly provides general advice on a number of financial products including ISAs, pensions and savings accounts. However, occasionally the Money Saving Expert is forced to address specific financial circumstances and today he addressed what people could do with their balance transfer cards.
A woman named Marilyn rang in to ask for Martin’s advice, asking if when they’ve been paid off should consumers close the accounts so they can apply for others elsewhere.
She also asked how this would all affect one’s credit score but Martin admitted to being unsure as the situation would likely differ between companies.
Martin asked for the company Marilyn had her card with which turned out to be MBNA.
After a bit of a technical glitch, Martin detailed the following: “The key is with MBNA, it allows existing customer balance transfers, so I wouldn’t close that card, I would keep that one on.
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Their research found that on December 1, the average number of interest-free days on a zero percent transfer credit card was 520 days, the lowest level since May 2015.
Additionally, the number of zero percent transfer credit card deals has fallen year-on-year.
In December 2019, there were 75 but for December 2020, the number had dropped to 60.
Despite the difficulty in finding these deals, seeking them out could still be worthwhile, with recent analysis from Experian showing millions of UK credit card holders could secure hundreds of pounds worth of savings before Christmas by switching to a balance transfer card.
This could be particularly useful for those with existing debt.
The money charity estimated UK households have an average credit card debt of around £2,241.
They went on to calculates that a customer with this balance, paying the minimum monthly payment of three percent (£67) with an APR of 20.9 percent, could be saving around £34 per month if they were to transfer their balance.
After taking the 1.85 percent transfer fee into account, this results in an overall saving of £865 over 25 months.
Amir Goshtai, the Managing Director at Experian Marketplace, commented on this: “Switching credit cards could save hundreds of pounds and help you to pay off debts faster. “Many people will have spent more money over Black Friday and Cyber Monday, so in the run up to Christmas, switching to a balance transfer card could help them cut the interest they pay.
“However, people should ensure it’s at a level they can afford, that they keep up with regular payments and stay within their credit limit in order to maintain their promotional rate.
“Before switching, people can check their eligibility on comparison sites like Experian’s, as it’s quick and won’t damage their credit score.
“The good news is our data shows consumer eligibility rising, and that lenders are continuing to bring products back to the market.”
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