How credit card users could save £300 per month – but there’s a warning

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CREDIT card pre-approval rates have doubled in the last month according to new analysis from Experian. This could bode well for consumers as additional research from Moneyfacts.co.uk has found that consumers could make significant savings by switching credit card deals.

Credit card pre-approval rates have doubled in the UK according to Experian’s “Credit Barometer”. Half of consumers will now be presented with a credit card that they are pre-approved for when searching online.

This is a drastic increase when compared to the same figures in July, where the number of people that saw a pre-approved card fell to one in four (24 percent).

These improvements, according to Experian, is due to businesses reopening in the UK as lockdown rules are eased.

This in turn has led to more people returning to work and as such, lenders have introduced new products back into the credit market.

Amir Goshtai, the Managing Director of Experian Marketplace, commented on the findings: “Over the past few weeks, we have seen significant improvements in the credit market.

“Last month we revealed that consumer eligibility for loans had improved by 60 percent.

“Now we’re seeing similar levels of growth in the credit card market, which had been impacted more by changes in lenders’ appetite for risk.

“Our panel of credit cards is now 50 percent higher than what it was a month ago, offering plenty of choice for consumers.

“These are all positive signs of recovery for the UK economy.

“Eligibility ratings mean people searching for credit can check their chances of approval before submitting an application – giving them confidence in applying for credit and protecting their credit score, especially during such challenging times.

“People looking for credit should use comparison services until they find the right product for their needs”

These improvements in credit access could be timed well for consumers as additional research from moneyfacts.co.uk has revealed that credit card holders can save a lot of money by switching provider.

According to their analysis, credit card holders could save £292 over one year by switching to a fee-free zero percent balance transfer card.

Rachel Springall, a Finance Expert at moneyfacts.co.uk, commented on how this could work in practice: “Credit cards are a safe and convenient payment method, but those who are unable to clear their card each month may be charged interest and those with a sizeable debt would be better off switching it to a fee-free zero percent balance transfer credit card.”

As the expert explained, savings could be had in terms of interest, however credit card users should heed a warning.

“In just one year, borrowers could save almost £300 in interest, but they will need to make more than the minimum repayment on their card to do so,” she said.

“If borrowers need longer than a year to tackle their debts then they could choose one of the longer offers but they will typically be charged an upfront fee, so comparing these carefully is a must.”

Rachel went on to provide general advice for those who are struggling with their finances.

As she concluded: “If consumers are struggling with their finances a good place to start analysing is by downloading a budget tool, such as MoneyDashboard.

“This free app allows consumers to see their financial commitments in one place and they can scrutinise where they may be overspending and what they can cut back on.

“During these difficult times it is also a wise decision for consumers to approach a debt advice service for support before their situation gets worse.”

Additionally, consumers and savers can seek impartial guidance and advice from the likes of Citizens Advice and the Money Advice Service.

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