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07 January 2013
More than half of UK credit card holders say they would never consider doing a balance transfer on their credit cards, according to new research by Nationwide Building Society1. By not moving their balance, people are not taking advantage of a useful way to manage their debt, and more importantly, could be missing out on significant savings.
In a survey of over 1,800 UK credit card holders, 53 per cent said they would never consider transferring their credit card balance to a new card. Yet, almost a quarter (24 per cent) would consider transferring a balance of up to £2,000.
People who don't pay off their card balance every month could save by transferring their balance to a card with a lower interest rate. For example, the Nationwide Credit Card and Select2 Credit Card both come with a competitive introductory offer3 of 0 per cent for 20 months on balance transfers in addition to a range of other benefits including cashback4, low APR and commission-free purchases abroad.
All balance transfers come with a fee attached yet, even including a fee of 3.1 per cent, a person could save £172.25 if they transfer £1,000 to a Nationwide credit card from another card charging 12.9 per cent APR. The saving increases to £259.61 if transferring the same amount from a card with an APR of 18.9 per cent and £343.03 from a card with an APR of a 24.9 per cent.5
In addition, anyone now opening either of the Society's two credit cards via www.nationwide.co.uk will benefit from a 50 per cent discount on the balance transfer fee. The reduced fee of 1.55 per cent, along with the introductory offer above, is only available if the balance transfer occurs within the first three months of opening6.
Paul Carvell, Nationwide's head of credit cards, said: "The New Year can often bring with it the stress of how to manage debt racked up through Christmas-related expenditure, particularly on the credit card. By taking advantage of a 0 per cent balance transfer offer, people can relieve some of that pressure, giving them the opportunity to reduce those balances at a manageable rate.
"This makes it all the more surprising that people would not think about moving their balance to take advantage of these offers. If nothing else, by not even considering a balance transfer, people are missing out on significant savings, which when you are trying to clear down debt, is crucial."
Representative example - Nationwide Credit Card
15.9% APR representative (variable). Based on an assumed credit limit of £1,200 and a purchase rate of 15.9% p.a. (variable).
Representative example - Select Credit Card
12.9% APR representative (variable). Based on an assumed credit limit of £1,200 and a purchase rate of 12.9% p.a. (variable).
1All figures, unless otherwise stated, are from YouGov plc. The total sample size was 2,222 adults, of which 1,835 have a credit card. Fieldwork was undertaken between 19 and 21 December 2012. The survey was carried out online. These figures have been weighted and are representative of all UK adults (aged 18+).
2The Select Credit Card is available to any members who use their Nationwide FlexAccount as their main current account or hold Nationwide's FlexDirect current account.
To qualify as a main FlexAccount holder, you have to hold a FlexAccount with a Visa debit card (not a cash card+) and:
3Introductory offers are available to new account openings where the customer has not held a Nationwide credit card for at least the past year. Introductory rates apply from the date the account is opened. Balance transfers at 0% must be made within three months from account opening and are subject to a fee of 1.55%. Balance transfers made three months after account opening are subject to a fee of 3.1% (minimum £5).
4Offer available on Select Credit Card only. For cashback, customers must maintain a main current account relationship with Nationwide.
5Calculations made using the Nationwide balance transfer calculator: http://www.nationwide.co.uk/creditcard/calculators/balancetransfer.htm. Figures are based on £1,000 balance transferred, 20-month interest-free offer period, no purchases, a balance transfer fee of 3.1% and assume a constant account balance with interest charged from account opening.
6Offer may be withdrawn at any time.
Nationwide is the world's largest building society as well as the second largest savings provider and a top-three provider of mortgages in the UK. It is also a major provider of current accounts, credit cards, ISAs and personal loans. Nationwide has around 15 million members.
Customers can manage their finances in a branch, on the telephone, internet and post. The Society has around 16,000 employees. Nationwide's head office is in Swindon with administration centres based in Northampton, Bournemouth and Dunfermline. The Society also has a number of call centres across the UK.