Moving Money On Credit Cards - Why Bother?

As a form of revolving credit - that is, a deal which has terms which may change according to the circumstance of both the lender and the borrower during the course of the arrangement - the credit card is generally assumed to more flexible than other financial arrangements.

Even with this proviso, though, there is a notable reluctance among card holders to move balances from one place to another, even when this would be the most rational way to change a deal and often to save a great deal of money.

In part, this reflects a reluctance on the part of consumers to change their financial products full stop.

It's a cliche often cited in the UK that Brits are more likely to get divorced or to change the allegiance to their football team (note to Yanks, the latter is not something that happens lightly) than they are to move their current account.

This is because the process is notoriously slow and horror stories abound of missed direct debits which have then resulted in charges for missed payments which far outweigh the benefits of moving the accounts in the first place.

Banks and other financial services advisers are keen to stress that the situation has improved in recent years but a feeling remains that the general public doesn't believe in these assurances - and who can blame them?

Looking to move a balance on a credit card is not like moving a current account, however, and is in fact usually much more akin to moving an amount of money by a BACS or other form of pre-existing arrangement between large financial institutions.

Go to compare credit cards and this is often not clear.

This is most obviously true in the case of 0% balance transfer credit cards which are designed precisely to have balances from other cards moved to them.

These cards aren't the only types of revolving borrowing that allows consumers to move money from a card but they are one of the few - alongside rate for life and so-called super balance transfers - that encourages it.

In most cases a balance transfer - that is, moving from one card to another - puts the transferred amount onto a high interest rate which must be paid.

These interest rates can be high - even rivalling the standard rates of bad credit rating credit cards - so this may also put people off moving money on credit cards.

So, why bother? Well, because the rewards - in lower interest costs - are worth hundreds if not thousands of pounds.

By: Julia Cook

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Julia Cook is a staff writer for a site that helps users to compare credit cards in the UK. The site also lists instant decision credit cards.