The average cardholder could save hundreds of pounds a year by switching their existing balances to a zero percent balance transfer card.
New research by Experian shows more people have been searching for ways to pay off debt quickly this year by reducing the amount they spend on interest.
A zero percent balance transfer credit card typically enables customers to stop paying interest for a set period – potentially up to 33 months, depending on the card.
These cards typically carry a fee of two to four percent of the amount being transferred.
Despite limited credit options in recent months, eligibility for debt consolidation products has increased by 11 percent from December to January.
Pre-approval rates for those in lower score bands have also increased by 25 percent on average, meaning that those most impacted by the tightening lending environment now have increased access to credit options.
Delving into the figures, Experian data suggested that the average credit card holder could save as much as £672 a year on average by switching their existing balances to a zero percent balance transfer card.
This calculation is based on Experian’s data that shows average credit card balances per person in the UK are £2,870, with an average APR of 27.5 percent.
James Jones, head of consumer affairs at Experian said: “January is one of the best times for people to search for new debt consolidation options as lenders offer a variety of new deals, such as longer balance transfer or purchase durations.
“Our data suggests that people are starting the year off on the right foot, exploring ways they can pay off their debt quickly by reducing the amount they spend on interest.
“The festive season can be expensive. As people look to plan their next holiday and save for exciting plans in the year ahead, it’s important to think about how any credit can be repaid back, in line with your circumstances and goals.”
For those facing increased financial strain following Christmas spending, Experian found that January is one of the best months to search for debt consolidation products.
According to the credit reporting company, people looking to better their finances this month could currently benefit from new and longer deals available.
These include Barclaycard’s 29-month zero percent Balance Transfer Card (with £20 cashback); Santander’s 28-month zero percent Everyday Long Term Balance Transfer credit card; and HSBC’s 27-month Balance Transfer credit card.
Mr Jones added: “We always encourage people to first check their eligibility for a product before making an application, as searches don’t affect your credit score.
“And if you are struggling with a debt repayment plan or would like support with an approach then we recommend contacting a free debt advice service such as National Debtline, Citizens Advice or StepChange.
“Talking to a debt adviser does not affect your credit score and the sooner you seek help the better.”
