Card users to transfer £2.8 billion in 2011

By Julie Sherrier

Balance transfers are set to be a common debt management practice this year, according to a new report by Santander Credit Cards. The card provider's latest research suggests that one in three credit card holders with outstanding debts plan to shift their balance on to a new card this year in order to achieve a lower rate of interest or simply consolidate a number of smaller debts.

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Balance transfers to total £2.8bn
More than 2.8 million people with unsecured debts plan to compare credit cards and transfer their outstanding balances to new cards this year, reports Santander Credit Cards. According to the card provider's latest poll, which was carried out among more than 2,000 adults in November 2010 by research firm Opinium, the amount shifted on to new credit cards in 2011 is likely to reach £2.8bn.

Ian Coles, director for Santander Cards, commented: "Our research shows that millions of people are switched on to the benefits of transfer offers and are choosing to take a proactive approach to managing their money, which is great to see."

Average balance transfer sum has fallen
While balance transfers are set to be popular, the actual amount being transferred is decreasing. The research shows that the average 'credit shifter' expects to move £1,015 on to a new credit card, compared to the typical figure of £2,290 at the end of 2008. Mr Coles believes that this signals a greater degree of financial prudence among British consumers. He explained: "The fact that the average amount being transferred has fallen considerably over the past couple of years would suggest that consumers have reined in their spending and that credit cards are being increasingly well managed."

Best way to approach balance transfers
According to Mr Coles, consumers with outstanding debts should compare credit cards to see whether they could save money by performing a balance transfer. Some card providers offer extended 0% periods on balance transfers, which is useful for those customers who are unlikely to pay off their full balance quickly. However, most lenders will only offer this perk to applicants who they believe to be dependable, so consumers are advised to check their credit history before applying for a new card. This can easily be done by visiting the website of one of the main credit reference agencies, such as Experian, Equifax or Callcredit, and requesting a copy.

See related: Consumers turning to debit over credit cards, Should savings be applied to card debt?

Published: 28 January 2011