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Switching credit cards & loans – what makes you change provider?

Switching credit cards & loans  – what makes you change provider?

Category: Credit cards

Updated: 31/10/2008
First Published: 03/07/2006

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The latest moneyfacts.co.uk user polls have revealed that 38% of us have changed credit card provider due to bad customer service. On top of this, 36% of us have avoided a particular provider because of a friend's bad experience.

As far as personal loans are concerned, 18% of us have changed provider due to bad customer service and 40% of us have avoided a particular provider.

These figures show that customer service is still something that is important to all of us. If we have a query or problem with our personal finances we expect to be treated fairly and to get the help and information we need.

Word of mouth is also a huge influence when deciding with whom to take out a loan or credit card with. If we have had a bad experience with something we tell everyone. Unfortunately for these providers, it is rare for us to tell friends how helpful or good a particular service is.

Less of us move our personal loan due to bad service than we do our credit card. The main reason for this is that there are often penalties for repaying personal loans early. This can equate to hundreds of pounds. So, however fed up you are with customer service make sure you check what penalties are involved for leaving your lender.

Whether you avoid a provider due to having heard bad reviews is your own choice. With personal loans and credit cards there is so much variation in rates offered that it is wise to shop around to make sure you are getting a good deal. The examples below show that rate is an important factor when deciding where to borrow money.

Loan rates can vary from 5.5% to over 20%. On a loan of £10,000 over five years this makes a difference of over £50 on monthly repayments – over £3,000 over the term. This shows that you should not take out the first personal loan you see. However, the rate you are given can depend on your credit rating. This is a scoring system that lenders use to show how creditworthy people are. Thus, you may not always qualify for the headline rate, so make sure you know what rate you are being offered before taking out your personal loan.

Interest rates on credit cards can reach over 20%. If you had a balance of £1,000 on your credit card at a rate of 20%, paying off the minimum monthly payment amount, you could save over £100 in a year by moving this balance to a credit card with a 0% balance transfer deal.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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