Warning over adding to credit card debt when making purchases

Consumers are adding to credit card debt by making purchases on balance transfer cards, a price comparison site has warned.

According to moneysuper…

Consumers are adding to credit card debt by making purchases on balance transfer cards, a price comparison site has warned.

According to moneysupermarket.com, nearly two-thirds of people with such products have bought something with them, despite higher interest rates.

The firm warned a £50 purchase through a card with a balance transfer of £2,500 could create a charge of £106 over 12 months.

Head of banking Kevin Mountford explained that the least expensive debt is typically paid off first, although this is due to change in order to help those with debt problems reduce what they owe.

“It is … worrying that many credit card holders still make the crucial error on their cards of using them for both balance transfers and purchases,” he said.

The comments came after MBNA announced it is allocating credit card payments to the most expensive debt first from September, after the industry and the government revealed all companies will be doing this from January onwards.

By Andy Mackay

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