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Personal loan market faces new credit card challenge

18 May 2005

New research for MoneyExpert.com shows that the average interest-free period on credit cards has been reduced to 53 days.

On top of this some providers charge as soon as the cardholder spends - even if the balance is cleared every month.

Those who use cards without interest-free periods will incur interest charges as soon as the transaction is registered with their card provider.

However, new 'zero cards are beginning to creep in, says MoneyExpert.com.

While new zero cards may not offer an interest-free period, they do not charge interest if customers clear their balance every month.

"Credit card companies are struggling to make money thanks to the so-called 'rate tarts' who switch from special deal to special deal," explained Moneyexpert.com chief executive Sean Gardner.

It is estimated that these consumers are costing the industry at least £80 million a month or £1 billion a year.