11 April 2005
The number of credit card providers choosing to charge customers for "zero" per cent balance transfers is on the rise, according to financial experts.
The revelation follows last month's move by Tesco Personal Finance to levy fees for transferring balances onto their card, a step described by analysts as representative of a broader national trend.
"This time last year credit card companies were clambering for customers to transfer their debt. At this time charges for balance transfers only affected a few cards," commented one economist. "Now there are an increasing number of providers in the market going down this route."
Another analyst pointed out: "Whilst the zero per cent deals on offer have been great for consumers, the question remains of how far providers can go in offering ever-longer zero per cent deals. The longer the period, the harder it is to make a profit.
"The move by Tesco further proves that the days of long zero per cent balance transfer deals without a fee could be numbered as all providers will be looking at ways to avoid losses accrued from customers that frequently 'churn' their debt from one card to another without using the card for purchases."
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