08 Mar 2008 12:27:47 | Rachel Lane
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Credit card companies are losing around £2 - £3 billion a year
through offering consumers 0 % deals on balance transfers and
purchases.
While so called 'rate tarts' have enjoyed the benefits of
switching debt between credit card providers - at the expense of
the plastic firms - Moneynet.co.uk, the online financial data
comparison site, today said that UK credit card firms would have
to deliver ever more competitive products if they wanted to
retain customers.
"Recent research from Apacs and the BBA* shows that spending on
credit cards is expected to rise by just 3 per cent over 2005 -
down from last year's rate of 8 per cent - and Apacs has
forecast zero growth by the end of 2006.
"The standard credit card is effectively an endangered species,"
said Moneynet chief executive Richard Brown.
"Up until the end of last month, borrowing on credit cards has
grown by just £0.8bn, compared with £3.8bn during the same
period last year. But debit card use is currently going up at a
rate of 20 per cent a year, and now accounts for two thirds of
all spending on plastic," said Brown.
"And there are new threats to the overall health of the credit
card - Egg's new Money Manager account, effectively a debit card
with an overdraft facility where you earn interest on credit
balances and pay interest when overdrawn - is likely to herald a
new trend, with more flexible cards that will pay interest when
in credit."
"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," he added.
* Apacs report, August 2005
BBA bulletin, September 2005
http://www.moneynet.co.uk
* * * * * * * * * * * * *
Notes for editors:
Credit Card Borrowing Facts:
* 93% repaid in a year
* 73% repaid in a month
* 17% borrowed at 0% interest
Source: APACS Review of 2004
About moneynet
Moneynet.co.uk is the UK's most established personal finance
research and data website. The company offers consumers a wide
range of low cost financial products: from mortgages and
personal loans; to car, home and medical insurance; credit
cards; savings accounts and best-buy fixed rate products.
Moneynet.co.uk is an ethical, impartial and comprehensive source
of consumer finance information, covering the whole of the
personal finance sector.
Contact details:
Phone: 0208 313 9030
E-mail: online@moneynet.co.uk
Web: http://www.moneynet.co.uk
Press enquiries:
Moneynet
Richard Brown, Chief Executive,
Phone: 020 8313 9030
David Andrews Media Ltd
David Andrews
Phone: 01273 774109
E-mail: david@davidandrewsmedia.co.uk
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