Millions plan to card hop this year

By UK CreditCards.com

Some 1.9 million people are set to switch credit cards over the next 12 months because the interest-free balance transfer period on their existing card is about to expire, new research suggests.

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Hundreds of thousands more will also switch cards to obtain a new interest-free period for purchases, according to the study by Sainsbury's Finance. The findings suggest that many consumers will be heading online to compare credit cards and find themselves a better deal.

2.5 million to switch credit cards
The latest research from Sainsbury's Finance indicates that some 2.5 million people will change credit cards over the next 12 months. An estimated 1.9 million are approaching the end of their existing interest-free period for balance transfers, while a further 867,000 have cards where the interest-free period for purchases is about to expire.

"In total, 7.9 million people told us they plan to take out a new credit card between October and September 2012, and 32% of these said it is because of their interest-free periods ending on their existing cards," said Stuart McKeggie, head of Sainsbury's Credit Cards. "This is still clearly the main reason for taking out a new card and for those that want to spread their costs, it can be a sensible financial planning option."

Experts: Beware high APRs at end of introductory periods
Remembering to compare balance transfer cards is particularly important, as the standard rates on these cards once the initial interest-free period has expired tends to be higher than on the average credit card. According to an analysis of industry data by Sainsbury's Finance, the average balance transfer card reverts to 18.2% APR at the end of the introductory period.

This means that people who forget to transfer their outstanding balance before their interest-free period has expired could find themselves paying far more than necessary for their borrowing. 

See related: Editor's Choice: Best balance transfer cards 2011Brits more committed to spending than saving?

Published: 23 November 2011