Money News

End for ‘rate tarts’ as 2 million credit card applications rejected

Thursday, 25 June 2009 Writes Hazel Cottrell hazel.cottrell@consumerchoices.co.uk

Tougher lending criteria and a reduced choice of balance transfer cards could leave credit card ‘rate tarts’ struggling to make their next switch.

Over one in 10 people have had a credit card application rejected in the last year and 57% of these were for balance transfer credit cards, according to a survey carried out by uSwitch.

“Constantly reapplying to different suppliers will make the situation worse”

Last year 7.8 million balance transfers were carried out, but this figure could drop dramatically as rate tarts may now find it more difficult to switch their balances.

The survey of 1,011 card holders suggested that almost two million people in the UK could have been rejected for a balance transfer card this year.

Louise Bond, personal finance expert at uSwitch, said: “The knock-on effect of rejected credit applications is that it will appear on your credit report and, in the long term, have a negative impact on your score.”

She advised those looking to get a new balance transfer credit card to check their credit rating before applying, to give them a better chance of being accepted, and warned: “constantly reapplying to different suppliers will make the situation worse.”

There are only 178 balance transfer credit cards on the market, compared to 204 this time last year. The Virgin Money credit card (www.virginmoney.com) is now the only card on the market that offers a 16-month 0% balance transfer deal.

Bond suggested: “If you can’t get another credit card, think about using a 0% overdraft, an unsecured personal loan or, if there are no other options and your debt is getting out of control, speak to your provider or seek professional advice.”