People reorganise their debts in January

More people apply to credit card companies for balance transfer deals at the beginning of a New Year more than at any other time. Banks are always prepared for a busy January as millions of customers have made resolutions to reorgnise their finances, and will be frantically searching for cheaper ways by which to pay off their expensive Christmas debts.

The good news for customers is that providers, who are all competing for a piece of the action, usually launch a whole host of new and appealing credit card offers, the recently relaunched Barclaycard that offers customers an interest free period of 2 years for transferring their balances, being a prime example.

Before you get all excited however and try to jump onto the bandwagon of balance transfers, it is worth bearing in mind that only 50% of credit card applications are actually successful, this is according to the latest research by the UK Cards Association. This figure has been based on the research that took place between January-October 2009, and are unlikely to have changed since then.

A change in the law also means that, as of 2010, lender have only to offer their advertised rates to 51% of the successful applicants, down from the previous required figure of 66%. This effectively mean that providers can offer nearly half of the new customers a worse deal, such as a shorter period of 0%, lower credit limits and higher interest rates, than the one they originally applied for.

James Jones from Experian, the credit reference agency, said that all this depends very much on the lender and if you go with a lender looking to recruit new customers and expand their books you may have a better chance of getting the deal you applied for. He also stressed, however, that lenders are generally erring on the side of caution and they are not told the current success rate of applications.

He added that they know from the amount of customers who approach Experian to review their credit history that there is still a very significant amount of people who are struggling to get credit. Only those with a pristine credit history stand a chance of getting the best deals out there,  and Jones said to review your credit history before you apply for a new credit card and be realistic and avoid wasted applications for credit.

He also pointed out that the worst thing you can do is to make multiple applications within a short space of time, due to the fact that while your credit report doesn’t show declined applications it does show that you have applied. Making lots of applications in a short space of time also smacks of desperation and that’s the last thing you want to display, so do your homework before applying for anything.

The 3 main credit reference agencies; Equifax, Callcredit and Experian allow you to access your credit reports online for a charge as little as £2, and you should look for things such as repeated late payments as these adversely affect your credit rating.