However, in the aftermath of the festive season many will now be dreading sorting out their credit card balance, and for many the natural solution will be to transfer the balance onto a 0 percent balance transfer card.

Credit card giant Santander Cards has released figures that suggest that during the first quarter of this year struggling Brits will transfer around £3.2 billion onto balance transfer credit cards in a bid to avoid paying interest on the debts that they have built up on their higher interest credit cards.

Around four and a half million consumers, equating to 10 percent of the population, are planning to look for new credit card deals during the first three months of the year according to Santander.

The research indicated that the average amount that would be transferred onto a new credit card by each consumer would be £1140, and the area in which the most money would be transferred onto other credit cards would be the south east of the country. The highest number of people transferring balance is likely to be seen in Northern Ireland at 34 percent, whereas in the north east only 8 percent of consumers are expected to transfer money onto a new credit card.

A spokesperson from Santander said that the fact that so many people would be transferring balances showed that people were becoming more educated over their finances, stating: “This is a clear sign that consumers are becoming savvier when it comes to managing their finances. It’s encouraging that so many Britons are planning to take control of their finances in the New Year by transferring an outstanding credit card balance to a 0% deal.”

Balance transfers on credit cards to soar in first quarter is a post from: Credit Cards Web

Balance transfer deals became very popular over the years, as they enabled those with high interest existing credit card debt to transfer the high interest balances onto a 0 percent credit card, which would then enable them to enjoy a generous period of interest free credit within which to repay all of the money transferred on to the card without the need to pay more interest.

In August of 2005 there were ninety credit card providers that were offering these credit card deals, according to the figures.

However, by August of this yea the number of providers offering these credit card deals had plummeted to just fifty two, almost halving in the space of just four years.

This has been partly blamed on the global credit crunch, which has seen the whole financial sector change, and has resulted in fewer choices for consumers that were hoping to save money on their credit card interest.

However, on a good note there has apparently been an increase in the length of time for which these deals are available, as the average time was 6.48 months in 2005, which has now risen in 9.7 months now. Lat year the average length of time for these deals came in at 10 months.

There are now around twenty four credit cards that offer interest free periods of at least twelve months, and a year ago there were thirty nine of these cards. However, in 2005 there were no cards that offered such long interest free periods.

One industry official said: “With bad debts causing a real headache for most credit card lenders, it’s no surprise to see that the number of interest free balance transfer deals has started to decline. It’s not just the total number of 0% balance transfer cards that have fallen away, but we’ve also seen the number of longer term offers chopped too. Whilst there are still 0% deals to be found, lenders have become ultra cautious and only the very best customers will now have a chance of being accepted for these cards.”

Number of balance transfer deals halved in four years is a post from: Credit Cards Web

The balance transfer credit card from MBNA comes with a fee free facility for those transferring balances onto the card, and also offers an introductory low rate of just 1.9 percent for the first year. After this time the rate will revert to the standard variable rate, which is 15.9 percent.

Officials have said that many consumers may be drawn to the card because there is no fee charged. With MBNA credit cards the minimum repayment is £25 a month, and this means that repayments are likely to be much higher than any interest being charged on the outstanding debt.

Officials have said that the card could help consumers to save money on interest over a twelve month period even compared to some 0 percent interest credit cards that do charge a fee.

Many people have been turning to balance transfer credit cards in order to save money on interest and this is done by transferring debts from high interest credit cards onto either 0 percent balance transfer credit cards or onto low rate balance transfer credit cards. By doing this consumers are often able to save a fortune in interest, whilst enjoying a generous period within which to repay the debt on an interest free or low interest basis.

One consumer who had several thousand pounds on various high interest credit cards stated: “I was getting fed up with having to pay so much interest on these credit cards debts, but I couldn’t afford to clear them all in one go. I transferred my balances onto one low rate balance transfer card, and this is saving me a fortune in interest as well as providing me with the convenience of dealing with just one provider.”

MBNA launches no fee credit card is a post from: Credit Cards Web

Also, nowadays there is no such thing as a fee-free balance transfer. Average fee tends to be around 3% which is added on to the debt. In real terms, this equates to an interest rate of 5.7%. So it isn’t really no-interest, but low-interest, with transfer fees subsidising the cost of providing 0% interest.

But still, these deals are the biggest loss maker for credit card providers and with the release of the consumer white paper, providers are going to cut costs when the proposals are made law. Realistically, this may mean the end of the 0% balance transfer for good.

However, 0% balance transfers, although the friend of ‘rate tarts’ and previously (before transfer fees and when 0% was really 0%) ‘stoozers’, they’re not for everybody anyway. As well as transfer fees, 0% balance transfers require that you be very disciplined. At the moment, if you spend money on a credit card with a 0% balance on it, any payments you make will go towards the 0% balance first, not the new balance which is having interest charged on it (although this practice of payment hierarchy is set to be outlawed), so you need to be careful not to spend anything extra.

You also need to be ready to swap to a new deal when your current deal period ends or you will start paying interest (currently about 1.4% monthly). On average, this means a swap and a new card- and new balance transfer fee – every ten months. Also, some cards operate ‘traps’ such as removing you immediately from your 0% deal if you make a payment late.

So what are the alternatives? Well, a personal loan could pay off all your current debt if you’d like to get rid of your cards before good deals get harder to find, but at upwards of 7.9% APR, they aren’t a cheap option and the monthly payments are fixed. If you want to cut the hassle of tarting about every few months and the flexibility to pay more towards your balance whenever you’re feeling a little more flush, consider switching to a lifetime balance transfer card. At rates starting at 6.8% applied until the balance is paid off, they’re cheaper than personal loans and less hassle than switching cards all the time.

Bear in mind however, that a balance transfer fee will apply (around 3%) and some cards charge an annual fee. If you’re prepared to pay over your minimum payment when you can, they can be a good long-term option to reduce your overall debt. It might be worth getting in now while these good deals exist and before the credit card companies feel the effects of belt-tightening.

The End Of The 0% Deal? Lifetime Balance Transfers May Be The Answer is a post from: Credit Cards Web

This move could see other credit card companies following suit in order to remain competitive, which will be good news for consumers in the current financial climate.

The balance transfer fee that the credit card giant was charging on its Barclaycard Platinum before the announcement was made was 3 percent of the total amount being transferred onto the balance transfer card.

However, earlier this month the provider confirmed that this balance transfer fee has now been cut by 0.5 percent, taking the fee to 2.5 percent of the total amount being transferred. This could help those transferring larger balances to save a fair amount.

The credit card offers interest free credit on balance transfers for a twelve months period, so after paying the fee customers have twelve months within which to clear the transferred balance without being charged any interest at all. After the interest free period is over the APR reverts to the card’s standard one, which is 12.4 percent. The card also offers interest free credit on purchases for the first three months from when the account is opened.

The Managing Director at Barclaycard, Amer Sajed, stated: ‘This reduction will mean customers looking to move their balance now have to pay less to get a market leading deal.’

The credit card market continues to be competitive, and in order to keep up with competitors such as Barclaycard other credit card providers may take similar action in cutting the interest rates charged to credit card customers.

Reduction in balance transfer fee from Barclaycard is a post from: Credit Cards Web

The credit card enables consumers to enjoy fee free credit when they are spending abroad, so many Brits will be keen to take advantage of this if they are heading abroad for their summer holidays, which are now just around the corner.

When the card was launched last year it proved to be popular amongst credit card users. However, for the past few months it has been taken off the market, with Abbey focussing on other financial products instead. However, with the holiday season about to kick off the Abbey has decided that this is the right time to launch the card again, so that holidaymakers can enjoy the fee free feature and look forward to a more affordable holiday in terms of spending.

In addition to this fee free feature, the Zero credit card also offers twelve months interest free credit on balance transfers, along with three months of interest free credit on purchases.

One industry official said: ‘The relaunch of the Abbey Zero card is fantastic news for customers who are looking to cut down on their costs when using their card abroad this holiday season. In recent months, other providers have increased such charges, but with the Zero card, no foreign exchange or cash advance fees are charged. Coupled with a long balance transfer deal, this card will have a wide appeal to customers.’

Another stated: ‘British holidaymakers heading overseas will be hit hard by the weakness of sterling this year so the ability to make purchases without the usual 2.75% plus fee will give a much needed boost to the holiday kitty.’

Return of the Abbey Zero card is a post from: Credit Cards Web

The credit card that was launched by Abbey offers consumers 0 percent interest on balance transfers for the first fifteen months, enabling those that transfer their existing credit card debts onto the card to enjoy fifteen months of interest free credit within which to repay the balance.

The new credit card also offers three months’ interest free credit on purchases made on the card, and after the initial three month period the interest is charged at 15.9 percent.

However, industry experts warn that when cards offer a shorter interest free period on purchases compared to balance transfers consumers should stick to using the card just for balance transfers and not for purchases, as any debt from purchases will be pushed to the back in terms of repayments which means that it will quickly start accruing interest whilst repayments are all allocated towards the interest free transferred balance on the card.

The balance transfer fee on the credit card stands at 3 percent of the total amount that is being transferred onto the card.

According to officials from Abbey credit cards there are around three million people in the UK that are planning to transfer credit card debt to the tune of around seven billion pounds over the coming months, as many want to try and take advantage of introductory rates and long interest free periods to help them to weather the ongoing financial crisis through saving a small fortune on interest. There are several cards that are now offering generous repayment periods on balance transfers, although most will only be available to consumers with a decent credit rating.

New 0% balance transfer card launched by Abbey is a post from: Credit Cards Web

The launch of 0% balance transfer credit cards has played a big part in the rise of rate tarts, with consumers using savvy skills to save money on the amount of money that they have to pay on their interest.

Basically, rate tarts tend to switch their credit cards on a regular basis, so that as one 0% interest period draws to an end they can transfer their leftover balance onto another deal, and as that one draws to an end they transfer again, and so on. This enables them to enjoy a far longer period of interest free credit, although it is not something that was looked upon favourably by lenders, who were not happy about losing so much money on interest. Lenders then responded to these actions by adding a balance transfer fee to cover the costs of these new acquisitions.

However, the boom days for rate tarts seem to be well and truly over for a number of reasons. First of all, the number of credit card deals on the market have been falling as a result of the global credit crunch, and the borrowers that may have once found it easy to keep switching credit card deals to save money may now find that they cannot get credit cards from many lenders, which puts a spanner in the works of those that want to keep switching from one interest free deal to another.

Another thing that is likely to affect the success of rate tarts is the fact that credit card companies have now started sharing information with one another, and this could make it increasingly difficult for those that want to keep switching their credit cards to get 0% interest for a longer period of time. At a time when many rate tarts have found that their money saving tactics are being challenged by the market, this could make a difficult situation even worse, which is bad news for rate tarts that were hoping to offset the cost of Christmas by changing cards.

As part of the data sharing process credit card companies will be able to look at various aspects of the cardholder’s account, and this includes things such as their repayment habits, how much is paid off each month, what the outstanding balance is, whether they have a 0% interest deal, whether the card is used to make cash withdrawals, and whether any changes have been made to credit limits on the account. All of this will help a new cardholder to decide whether to accept or reject credit card applications.

One industry expert stated: ‘While the increased levels of data sharing may prevent some cases of customer over-indebtedness, it also gives lenders the ability to pick and choose customers and decline applications from non profitable ‘rate tarts’, who constantly move their borrowing to 0% deals.’

Another stated: ‘Once they see the levels of debt, they could decide to increase your interest rate or reduce your credit limit based on the new information.’

The problems facing credit card rate tarts is a post from: Credit Cards Web

With this in mind many industry officials are recommending that consumers start looking around for good deals on 0% balance transfer credit cards, so that they can transfer the debt from their higher interest credit cards onto the 0% balance transfer card and avoid having to pay any interest on their debt. By transferring the balance onto a 0% balance transfer credit card you can save a small fortune on the interest that you would otherwise have to pay on your credit card debt.

However, consumers are also warning that there is a shortage of 0% balance transfer credit cards on the market, with many lenders having taken some of their deals off the market, which means that it could be harder for consumers to find a suitable deal in time to transfer the debt and save money on their interest. Also, the tighter credit conditions that are in place as a result of the global credit crunch could also make things more difficult.

One industry official said: ‘For those that want to try and transfer their high interest credit card balances and save money on interest it is important to start looking around for suitable credit card deals right away, as processing can take longer at this time of year due to holidays and higher application levels. Try and find a card with the most generous interest free period, but also be mindful of the balance transfer fee that is charged on the card.’

Start looking for balance transfer cards for New Year financial hangover is a post from: Credit Cards Web

With a 0% balance transfer credit card consumers are able to transfer their high interest balances from existing cards onto the new card, and can then enjoy a long period of interest free credit within which to repay the total transferred balance without being charged any interest.

For those that want to avoid making interest payments on high balances this could prove an ideal solution but it is important for consumers to act quickly so that they get their balance transfer cards in time to transfer their balances after Christmas or the New Year.

Some could benefit from a 0% purchase credit card instead, and this can be used to make purchases over the Christmas and New Year period. Again, these cards offer an extended period of interest free credit, which enables consumers to spread their repayments over a generous period without being charged any interest as long as the balance in cleared within the specified interest free period, which can vary from one provider to another.

With regards to 0% balance transfer deals one official said: ‘It’s a good idea to be prepared for January by taking out a good credit card deal. But don’t use it for purchases because your payments will always go towards the cheapest debt first. Though some cards with 0pc deals extend them to purchases, this is usually only for the first few months.’

Consumers told they could benefit from transferring balances is a post from: Credit Cards Web