'Rate tarts' costing finance firms £1bn

So-called "rate tarts" who switch between nought per cent deals on credit cards to keep their debts interest-free are costing finance companies about £1billion a year in lost revenue.

Richard Thompson, partner at PWC, said: "There is a clear danger that issuers are growing a breed of so-called 'rate tarts' who will move perpetually from issuer to issuer to finance their debts at no cost." The report, Precious Plastic 2005, also predicts the number of cards in issue will rise, although the number of cards used by consumers will decline.

The growth of "chip and pin", where consumers have to remember their code number, is expected to lead to a reduction in the number of cards a person uses. Most will use only one or two cards regularly.

The number of adults holding a credit card is expected to increase by a further three to four million, or 10 per cent, over the next few years.