Borrowers warned over credit card transfer trap

Debt experts have warned borrowers about the dangers of transferring money from their credit cards into their bank accounts.

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The debt charity Credit Action advised that borrowers who sign up for one of the many money-transfer cards on the market in a bid to clear other debts could end up in a high-interest trap.

Many credit card customers take advantage of zero percent introductory offer to transfer cash into their current accounts, paying off an overdraft in the process. However, if consumers aren't careful they can end up in more debt.

Data company Defaqto says there are now 61 cash-transfer cards with an interest-free period on the market. However, there is usually a fee for moving cash (commonly four or five per cent of the amount transferred) and if you fail to pay back the full amount before the end of the interest-free period, the charges soon mount up.

While it can be a cheap way to borrow if used correctly, miss your monthly payments or fail to transfer your cash within 60 days and it's likely you'll pay far more in interest that you would with a personal loan.

Credit Action suggests borrowers should read the small print carefully.

Michelle Highman, from the charity, told the Daily Mail: "Money-transfer cards can be great if you use them within the interest-free period, but you must understand what you're signing up for and pay back at the right time.

"A zero per cent offer may look tempting, but break the rules and you can find yourself racking up very high charges."

What do you think? Have you fallen into the credit card transfer trap? Leave your comments below...