June 1, 2006

By Peter Kenny

A recent online survey has shown that 80 per cent of consumers were looking to transfer a balance of no more than £5000 between.

The figures showed that over 45 per cent of voters had between £2001 and £5000 to transfer while nearly 35 per cent had up to £2000. It was recently revealed that the average UK credit card account balance was £3500, the survey figures certainly seem to confirm this.

Other findings were that nearly 12 per cent had between £5001 and £7500 and nearly 6 per cent were looking to transfer a balance of between £7501 and £10000. Coming in with the lowest figure of just over 2 per cent were the consumers who were looking to transfer more than £10000 between.

The recent trend by many banks and credit card companies is to apply a fee to balance transfers. The fee is normally 2% to 2.5% of the balance to be transferred, initially this fee was usually capped at around £50. Recently many banks and credit card companies are removing this cap and leaving the size of fee open ended.

The removal of the balance transfer fee cap has consequences for consumers who have a balance of over £2500 (calculated on a balance transfer fee of 2%) If the previously stated average of £3500 is taken into consideration then the balance transfer fee jumps to £70 (2%)

If banks and credit card companies are to continue with their 0% introductory offers, there is no doubt they will increase their fees to compensate for the loss in income while the introductory offer is in place. We have recently seen that Barclaycard and Egg have increased their balance transfer fee from 2% to 2.5% and at the same time removed the fee cap.