Lenders are still being cautious after research from price comparison service uSwitch.com shows that at least one in 10 consumers have had a credit card application rejected in the past year.
More than half (57 per cent) of those rejections were for a balance transfer. USwitch says that being unable to switch to a new provider will result in people having to cover £535m in interest payments over the next 12 months. The number of balance transfer deals available has dropped from 204 this time last year to 178 and just one provider, Virgin, offers a 16-month, 0 per cent, balance-transfer deal.
"We can't ignore the fact that the country is in economic turmoil – a situation which has been catalysed by bad consumer credit," says Louise Bond, personal finance expert at uSwitch.
Consumers should check their credit history before applying for products as constantly reapplying will exacerbate the situation. Owen Roberts, the head of Callcredit Check.com, says borrowers should ensure that they are on the electoral roll and get rid of cards that are no longer being used. "Have at least one or two active credit agreements and check your credit report for errors which could be damaging your credit worthiness," he says.Reuse content