Bounty

After switching credit cards to take advantage of balance transfer deals nearly two thirds of customers run up interest bills, research has shown.

Financial website moneysupermarket.com said cards have been used to make purchases by around 63% of people who have taken advantage of 0% balance transfers.

Of those who went on to use the card for additional spending, nearly one third had not planned to do so.

Repayments are used to clear the cheapest debt first, meaning that spending money on credit cards that have been used for balance transfers could cost people hundreds of pounds in interest.

As a result, repayments will not be used to clear any additional spending until the money that was transferred to the card at 0% interest has been cleared.

The group estimates that making a purchase of just £50 on a card to which a £2,500 balance had been transferred could cost up to £106 in interest over 12 months.

From the beginning of next year, credit card companies will be required to use customers' repayments to clear their most expensive debts first, but until then, many firms are continuing to use them to pay down the cheapest ones, enabling them to make more money through interest charges.