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Borrowers don’t consider balance transfer fees


Borrowers may be paying more than expected in balance transfer credit card fees after being attracted by 0% interest offers, consumer group Which? has warned.

Consumers pay an estimated £334 million in fees each year, but only a small amount of people understand the costs involved. Which? has claimed that 70% of people believe the transfers to be free. They are now arguing that the FCA should show transfer fees as a monetary sum rather than a percentage, or even consider banning firms from advertising deals as 0% when there is a fee.

Many people use balance transfer to put old debts from a variety of financial products onto a new card. Which? believe that many people are blinded by the interest rates on the debt and don’t contemplate that some fees may be more expensive when considering the costs of the fees charged.

Richard Lloyd, Which? executive director said:
"Too many credit card deals appear to include sneaky fees designed to catch customers out.

"With millions now using credit cards to pay for essentials, it's vital that the Financial Conduct Authority takes action to ensure consumers are well protected.

"We want the regulator to scrutinise balance transfer deals and make it easier for people to understand their true cost."

The UK Cards Association has claimed that many deals provide good value to consumers and it is their responsibility to research what product would suit them.

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