Customers misled over 0% balance transfer credit cards

Zero per cent balance transfer credit card deals are often misleading and don't always offer a free transfer, new research has suggested. 

Zero per cent balance transfer credit card deals are often misleading and don't always offer a free transfer, new research has suggested. 

Consumer group Which? is looking to the Financial Conduct Authority (FCA) to investigate balance transfer deals, as it undertakes research to highlight the confusion among consumers.

Balance transfer credit card deals allow consumers to move current debts onto a new credit card, however the advertised zero per cent interest rates do not clearly show any transfer fees. Which? estimates that consumers pay about £334 million in fees for these deals each year, the majority of those not even knowing the costs that are involved. 

The research showed that respondents who currently had a credit card were asked to identify how much a balance transfer would cost. 68 per cent of respondents incorrectly thought that the balance transfer was free, with only four per cent able to correctly work it out. Consumers should thoroughly read the summary of costs associated with a credit card to compare products and choose the most appropriate. 

Which? suggests that the fee be shown as a monetary sum, or that advertising a zero per cent interest should be disallowed if there is a fee. This would stop consumers paying a higher debt due to fees that can be involved. If consumers are unknowingly paying additional fees, this could contribute to rising debt.

The consumer group has admitted its evidence to the FCA and asked it to investigate balance transfer fees to stop consumers being misled and to support them in choosing the best credit card option for their needs.

Executive director of Which?, Richard Lloyd, said: "With millions now using credit cards to pay for essentials, it's vital that the FCA takes action to ensure consumers are well protected. We want the regulator to scrutinise balance transfer deals and make it easier for people to understand their true cost."

Tell others:

shortlink