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Published: 12/01/2017

At this time of year, many people could be turning to balance transfer credit cards in an attempt to overcome their Christmas debt and get their finances back on track. However, many of these borrowers could get caught out in the year ahead, and they could end up paying for it.

Research from The Co-operative Bank shows that 20% of those who've taken advantage of a 0% balance transfer credit card offer in the last five years have fallen foul of the terms and conditions of the deal, and consequently had the promotional rate withdrawn early – leaving them open to paying far higher rates of interest, and costing them a collective £948m every year as a result.

Know your limits

Typically, balance transfer credit card terms specifically state that the promotional offer can be removed if the borrower misses a payment, pays late or goes over their credit limit, which will mean the card will revert to its standard APR. Given that many balance transfers could be for fairly hefty sums, it's little wonder that resulting interest payments could add up to such an extent, with many APRs being in the region of 18-20%.

Unfortunately, these kinds of small mistakes are relatively common, with 37% of credit card holders with a promotional offer having made them at one time or another. On average, those who lost the 0% offer did so just five months into the deal, while 7% made a mistake immediately, meaning they didn't receive the benefit of a promotional offer at all.

Many weren't even aware that a promotional offer could be removed – 30% of cardholders weren't aware that the card provider could remove the promotional rate if they missed a payment, and 31% didn't know it could be removed if they exceeded their credit limit, highlighting a worrying lack of awareness when it comes to credit card terms and conditions, and perhaps explaining why so many are caught out.

Costly consequences

Unfortunately, many could have to pay for their credit card mistakes in more ways than one. As a result of a balance transfer offer being withdrawn, 20% of respondents took out a loan to meet their repayments, while 37% dipped into their savings to cover the rising cost and 26% turned to their overdraft. A further 21% had to repay the full balance straight away, and 27% said the card's credit limit reduced to the amount they had transferred to it, so the consequences can be wide-ranging.

"Now is a prime time to review household finances as we start the New Year. A balance transfer credit card is an effective way to manage debt and cut the cost of borrowing by consolidating outstanding credit balances into one repayment, yet our study shows that many cardholders never really benefit from these headline promotions as small mistakes can prove costly," said Matthew Carter of The Co-operative Bank. "It is all the more galling when you have paid a fee to transfer a balance to a card, only to see the benefit you paid for being removed."

So don't get caught out! It's absolutely vital to know the terms and conditions of your chosen deal, and being financially organised is key. "Cardholders should be aware of their terms and conditions and take action to minimise the likelihood of missing, or making, a late payment by setting up a direct debit for at least the minimum amount," advises Matthew. This way, you can be confident that you'll keep your 0% deal for the duration of the term.

What next?

Confident you can stick to a repayment schedule? Check out the top 0% balance transfer credit cards to clear your debt without paying over the odds


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. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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