Think before switching cards as in the process of trying to avoid interests you might end up paying more. A number of credit card companies are charging consumers for transferring a balance from other cards.
Earlier the fee used to range around £50 but as of now a number of lenders are charging up to 3% of the balance. As balance transfer is generally charged upfront whereas the credit card interest is displayed as annual rate and it becomes difficult in comparing the true cost of balance transfer deals.
As per Andy Britchford, spokesman, Moneyfacts states:
Anyone considering switching must do the sums carefully. Where there is no cap on the fee and the interest-free period is no more than six months, the actual cost could wipe out any benefits.
Take for example a cardholder transfers a balance of £1,000 and the fee charged is 2% and the interest fee period is of six months then you would end up paying an annual interest rate of 7%.
