Moneyadviceforu

The typical person from the UK currently has two credit cards, new research indicates.

Data gathered by Abbey indicates that the average number of credit cards that a British consumer holds is two, but that 22 per cent of people have three or more.

Furthermore, people generally have between one and two cards which they have not used at all in the last year.

Abbey’s research also found that 20 per cent of people said that a cash back feature was the thing they looked for first when applying for a new credit card. Other popular features included a low ARP (16 per cent), shopping discounts (six per cent) and Airmiles (four per cent).

“Unless a person is using all of their credit cards, many don’t want to keep them up and running,” explained Roger Lovering, managing director of Santander Cards.

“In the current climate, people are becoming more and more savvy about the impact numerous cards have on their credit rating, and a significant number of cardholders are now looking to consolidate all their credit cards.”

Figures from the British Bankers’ Association (BBA) revealed that credit card borrowing dropped by £100 million in August

Credit card companies have increased the fees they charge people to shift balances between cards by an average of 0.5% during the past year, research showed.

Financial website MoneyExpert.com said providers now charged people who were switching balances to take advantage of introductory deals such as 0% interest an average of 2.67% of the amount being moved, up from 2.1% in September last year.

It said the increase had come since competition watchdog the Office of Fair Trading forced firms to reduce the penalty charges they levied on people who were late with repayments or breached their credit limits to £12.

The group said 160 credit cards currently gave people the option of transferring balances to them, with fees ranging from 1.75% to 3% of the amount being moved.

This means someone who was transferring an outstanding balance of £5,000 would have to pay up to £150 in fees.

The website is urging consumers to pay close attention to these transfer fees, as well as the interest rate they will be charged when they switch balances between cards.

Sean Gardner, chief executive of MoneyExpert.com, said: “Card firms have lost out since they were forced to cut so-called default charges so now customers are losing out as balance transfer fees increase.

“Analysts talk about the so-called water bed effect - cuts in one area mean increases in another area. And that has been the experience for credit card customers with new charges appearing to replace the old charges which have been cut.

“Customers should of course still switch credit cards in search of better deals and particularly if they are paying standard rates of 16.9% or so on debts. But they’ve got to remember there is a cost involved and factor that into any savings they make.”

Meanwhile online mortgage firm mform.co.uk warned that some lenders were charging consumers arrangement fees that would not be refunded even if their mortgage application was rejected.

It appears that credit card companies are taking a lesson from mortgage lenders.KCBS reporter Janice Wright has been looking into the shrinking number of low interest offers for consumers, along with growing interest rates.

Remember all those teaser zero interest offers that were coming in the mail?

“They were almost giving away credit cards to anyone who asked for them,” explained Curtis Arnold, founder of CardRatings.com.

Arnold’s company tracks credit card trends for consumers, and he said it’s hard to tell for certain but it looks like credit card issuers have been spooked by the mortgage meltdown and are scaling back that easy money with changes in recent weeks.

“We’re not seeing as many of the 12 month, 0% offers these days. We’re seeing more of the 9 month, 6 month, even as low as 3 month,” said Arnold

And, we’re seeing changes in rates and terms, which Wright reports credit card companies can do at will.

“Watch your statements carefully, watch any notices, change of notices you may get in your mail,” cautioned Arnold.

As Wright points out, it may look like junk mail to you, but may actually be a notice that your interest rate is going up or your credit limit is going down.