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Balance transfers phenomenon could be finished, experts warn

Thu, 15 Jun 2006

American Express' decision to stop new customers using cards for balance transfers could put an end to rate-tarts.

Rate-tarts - customers who take advantage of balance transfer cards and 0% credit cards to switch their debt and avoid paying interest - have been on the rise recently due to a plethora of credit card offers.

Credit card expert Nick White, head of personal finance at comparison site uSwitch, believes the trend could be nearing its end.

"American Express’ decision to stop offering balance transfers to new customers is a major development which could signal the beginning of the end of the rate-tart phenomenon that has dominated the credit card landscape for the last two years," he said.

"While these deals were very competitive for consumers, they came at a cost to the credit card industry, which was losing an estimated £600 million a year overall in revenue from balance transfer offers."

However Nick Kenley, head of credit cards at moneysupermarket recently pointed out that there are still around 50 0% credit cards on the market, which could be used for balance transfers.

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