Millions of overdraft debts becoming credit card debts

By Joel Stanier – Financial specialist

Millions of borrowers seem to be transferring their overdraft debt to their credit cards, many of them taking advantage of 0% deals on balance transfers to avoid interest charges.

As thisismoney.co.uk reports, overall overdraft and loan debts may be falling but the total debt on credit cards is growing: credit card debt has grown by 8.5% over the past year, according to the British Bankers` Association (BBA); it currently stands at almost £25 billion.

The site goes on to state that the average overdraft has a slightly higher interest rate (18%-19%) than the average credit card - and that credit cards `can also only charge a maximum of £12 for overspending or late payments, while some banks charge over £30 for unauthorised overdraft spending`.

"Zero-percent balance transfers can, in certain circumstances, make sense," said a debt expert for Think Money, "but it`s important that borrowers know how they intend to reduce their debt. Simply moving debt from one place to another won`t improve anyone`s situation - and there`s no guarantee that they`ll be able to keep finding more cards with the right kind of deal.

"Anyone who`s having difficulty staying on top of their debts should seek professional debt advice, so they can figure out the best way of dealing with their debts."

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