Credit card switching will be rife over next twelve months
Switching credit cards is something that many people do in order to save money on the amount of interest that they have to pay. By choosing interest free balance transfer and purchase credit cards some people have saved a huge amount of money. However, at some point these interest free periods come to an end, which leaves cardholders facing interest of an average 18.2 percent if they have not cleared their balance by the time the interest free period ends.
With this in mind, many savvy consumers make sure that they switch to another interest free deal well before their current one runs out so that they can continue to afford interest free payments on their credit card debts. According to Sainsbury’s Finance there are millions of people who are planning to switch their credit cards over the next twelve months as a result of their interest free periods coming to an end, and with competition in the market still stiff many should be able to find a good deal.
In the current financial climate a huge number of people are keen to cut back on their outgoings and reduce their spending as much as possible. Avoiding interest on credit card debt provides a very effective way of doing this, which is why people are prepared to put in the time and effort to do so.
An official from Sainsbury’s Finance said: “In total 7.9 million people told us they plan to take out a new credit card between October and September 2012, and 32% of these said it is because of their interest free periods ending on their existing cards. This is still clearly the main reason for taking out a new card, and for those that want to spread their costs, it can be a sensible financial planning option. Our Sainsbury’s Credit Card offers a very attractive interest free period on both balance transfers and purchases.”
Credit card repayments fall whilst withdrawals increase
Most people find that having a credit card offers freedom, flexibility and convenience, but over recent years more and more people have become reliant on their credit cards in an increasingly difficult financial climate. In fact, more recently people have been trying desperately to pay off their credit card debts, which have become a huge burden around the necks of many households and individuals.
However, things have become increasingly difficult for households of late, with soaring living costs and bills combined with frozen wages really taking their toll on household finances. Whilst many cardholders have the best of intentions when it comes to repayment their credit card debt, and have been trying to pay down this debt as much as possible, the difficult financial situation has made it impossible for many to keep this up.
According to the FICO Benchmark Reporting Service cardholders in the UK are now paying off less of their credit card debt than at any other time during the past two years, with many unable to afford to pay much more than the minimum repayment on their cards. This has been seen particularly with holders of classic credit card accounts that have been opened within the past five years. The data has also shown that the number of credit card users who are using their cards to make cash withdrawals has increased, as people continue to battle to make ends meet financially.
One official from FICO said: “The combination of flat spending on classic cards with lower payment percentages and higher cash usage indicates increasing strain on consumers’ wallets. While one month is not enough to call a trend, we are monitoring these and other patterns closely to help our clients manage their card portfolios and understand changes in the UK consumer’s financial health.”
Christmas shoppers need to act fast to get Christmas cards
Over the years many people have been using credit cards to make their purchases over the Christmas and New Year period, and over recent years this is a trend that has become more prevalent as shoppers have found it more and more difficult to save money in advance for Christmas in what has become a very difficult financial climate.
This means that there are likely to be many people relying on credit cards to fund their Christmas purchases this year, with some yet to apply for a credit card to use for their purchases. Industry experts are now warning consumers that now could be there last chance if they want to get an affordable credit card in time to do their Christmas shopping, as Christmas is just weeks away.
One finance expert said: “It’s vital that you compare credit cards to find the right one for you rather than just choosing one by the application deadline. However, with potential postal delays and increases in demand we recommend that you apply for your chosen credit card as soon as possible if you want to use it this Christmas.”
He said that it was important to remember that once an application had been made, credit card firms had to check and approve the application, send out credit agreements and documents, receive those back and then send out the credit card following by the PIN, all of which can take time. With the slower postal service over the festive season to take into consideration as well, consumers need to make sure that they time it right in order to ensure that they are able to receive and use their credit card in plenty of time.
Shoppers warned about spending too much over Christmas
After another difficult year in terms of finances, consumers are being warned by financial experts to avoid overspending on their credit cards and via other forms of finance over the fast approaching Christmas period. Each year many people spend a small fortune on their credit cards, store cards, overdrafts, and even via loans in order to buy gifts, food, clothes and other festive purchases, but this year could be worse than usual given that many people will not have had the chance to save any money.
For a huge number of people, the soaring cost of living has meant that not only have they been unable to put any money aside for their purchases at Christmas but they are also continuing to struggle to make ends meet financially due to soaring petrol, food, energy and insurance prices amongst other things. On top of these price hikes, wages for many have remained frozen for some time, forcing them to make their wages stretch further than in the past.
Officials have said that compared to other years consumers who use finance to pay for their purchases over the festive season will need to be far more careful. Shoppers are being urged to think carefully about the amount that they spend over Christmas and New Year and being advised to avoid getting carried away with the plastic when they hit the shops in the run up to Christmas.
One industry expert stated: “It can be really tempting to spend, spend, spend on a credit card over Christmas without thinking about the consequences. However, when that credit card statements wings its way through the letterbox in January many people will realize that they have landed themselves in hot water financially by overspending.”