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Door Closes for Credit Card ‘Rate Tarts’

26-August-2008, Writes Dan Drage dan.drage@consumerchoices.co.uk

Credit card holders looking to maintain a 0% balance transfer sequence face a difficult future when their current deal expires.

These 0% balance transfer stalwarts, known as ‘rate tarts’ by banks, look to pay their debt off without added interest by constantly moving their balance between 0% balance transfer credit cards.

However, according to research commissioned by financial comparison gurus MoneyExpert.com, credit card users whose 0% balance transfer deals have expired face sharp rises in interest rates imposed by providers. Moreover, providers are tightening their lending criteria, making it harder for people with debts to get new lines of credit.

MoneyExpert.com insist rate tarts who are used to swapping credit cards for continuous interest-free credit that they will soon have little choice but to repay the money they owe or face rising repayments.

Sean Gardner, director of MoneyExpert.com, had the following to say:

“Switching credit cards used to be commonplace and being a rate tart was seen as a sign of being savvy with your cash. But getting a credit card is much more difficult now”

He continues:

“The days of the rate tart are numbered as the effects of the credit crunch filter into the credit card system. With balance transfer fees now the norm and with banks being much more stringent with whom they lend to, most people will have to accept that having a credit card does not mean having free money.”

Someone with a credit card balance of £3,000 from a balance transfer will typically pay £494.70 a year in interest alone unless they pay back the money they owe. This is £41 more than at last year's lower typical APR.

Chris Eagle, Commercial Manager at CreditChoices.co.uk, has some advice for those whose 0% balance transfer deal is about to expire:

“Don’t apply for too many credit cards, 0% balance or otherwise, in a short space of time. Having a long history of credit card applications on your credit file will have a negative impact upon your credit rating.”

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