Credit card companies losing 3bn to 'rate tarts'
Credit card companies are losing around 2 - 3 billion a year through offering consumers zero per cent deals on balance transfers and purchases, report
11:31 23 September 2005
Credit card companies are losing around 2 - 3 billion a year through offering consumers zero per cent deals on balance transfers and purchases, reports Moneynet.co.uk.
So-called 'rate tarts' have enjoyed the benefits of switching debt between credit card providers, but financial website Moneynet believes that UK credit card firms will have to deliver ever more competitive products if they want to retain customers.
Richard Brown, chief executive of Moneynet, said: "The standard credit card is effectively an endangered species. Up until the end of last month, borrowing on credit cards has grown by just 0.8 billion, compared with 3.8 billion during the same period last year.
"One thing is for sure, mainstream card firms will have to be less complacent in order to retain existing customers - and win new ones.
"Competition in the credit card market is potentially excellent news for consumers, and with the likes of Egg shaking up the market with innovative new products, the longer term outlook for the canny borrower is good.
"But for the credit card company executives, the future might not be so rosy."