Zero interest deals cost credit card companies 1 billion a year
'Rate tarts' play the system, a new report has claimed.
12:29 01 November 2004
Consumers taking advantage of credit card companies' offers of 0 per cent deals are costing the industry an estimated 1 billion per year, it is claimed today.
More than fifty card providers offer zero interest deals, but a new report produced by PricewaterhouseCoopers suggests that large numbers of consumers are successfully playing the industry at their own game.
"There is a clear danger that issuers are growing a breed of so-called 'rate tarts' who will move perpetually from issuer to issuer to finance their debts at no cost", Richard Thompson, one of the authors of the report, warned.
"We anticipate that in future issuers are likely to become increasingly selective about which customers they offer balance transfers to and they will focus more heavily on customer retention."
Nonetheless, the report - entitled " Precious Plastic 2005" - predicts that the numbers of people in the UK holding credit cards will rise by 10 per cent over the coming years, to around 73 per cent of the adult population.
The study also suggests that, while more cards will continue to be issued, consumers will actually use fewer of them. It puts this down to the introduction of Chip and Pin technology, which requires card holders to remember a four-digit personal identification number to make transactions.