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Credit card warning as 0% interest terms shorten

Credit card warning as 0% interest terms shorten

Category: Credit cards

Updated: 10/11/2017
First Published: 10/11/2017

Conversations around last week's base rate rise may be primarily focused on what it means for savings and mortgage rates, but what about when it comes to credit? Unfortunately, it could have a knock-on effect on this sector of the market as well, and already, providers appear to be scaling back their 0% interest deals, with some raising standard purchase rates at the same time.

0% terms shrinking

Our data shows that several providers have scaled back their offers in the week since the base rate hike was announced, continuing the gradual decline of record-breaking 0% terms in recent months. Indeed, six months ago it was possible to secure a 0% balance transfer term of 43 months, yet now the best in the market comes in at 39 months. Things aren't quite so clear-cut in the 0% purchase sector, at least in terms of the longest deals, but the average term has still declined compared with six months ago.

The table below highlights the changes in more detail (it's worth noting that the average figures were compiled at the start of this month, before the base rate announcement, so could change further in the weeks ahead):

May 2017 August 2017 Today
Longest 0% balance transfer term 43 Months 43 Months 39 Months
Average 0% balance transfer term 659 Days 645 Days 631 Days
Longest 0% purchase term 30 Months 32 Months 31 Months
Average 0% purchase term 381 Days 365 Days 368 Days
Average purchase rate 22.6% APR 22.8% APR 23.2% APR


It's particularly telling that several of the top deals in the credit card market have been cut back and even withdrawn in the last seven days, with a lot of those changes coming from some of the biggest players in the market.

This includes Tesco Bank, who's reduced the introductory balance transfer term on its Clubcard Credit Card for Balance Transfers to 38 months (previously 39), while Lloyds Bank has reduced the term on its leading credit card to 36 months (previously 37) and raised its standard purchase rate to 19.9% APR, up from 18.9%, which means those who aren't benefiting from a 0% deal could end up paying more interest.

Similarly, Halifax has cut its top balance transfer term to 37 months (previously 38) and has also halved its 0% purchase term to three months, while upping its standard purchase rate to 19.9% APR. Bank of Scotland has done the same, shortening its balance transfer term by a month and halving its purchase term, while raising its standard APR at the same time.

MBNA has made several significant changes to its product range, including withdrawing its 30-month 0% interest credit card and replacing it with a card boasting 28-month introductory terms instead, and it also withdrew no less than 12 of its popular reward cards earlier this week.

Take advantage of the top deals

Given that the terms on even the best 0% interest credit cards are starting to shrink, now could be the time to make your move if you want to shift debt or make that all-important purchase without paying any interest. After all, there are still some lengthy deals available, and while the dizzy heights of 43-month 0% interest terms may now be a thing of the past, you can still easily find a deal that gives you over three years in which to repay your debt, and two-and-a-half years to clear a major purchase.

Start by checking your credit score to make sure you stand a decent chance of being accepted before you apply, then compare the top 0% credit cards to get an idea of what's out there. To help, here are a few of the best 0% deals currently available:

Top balance transfer credit card

Representative Purchase APR (Variable) Card Details
nuba Transfer Credit Card MasterCard
nuba Transfer Credit Card MasterCard
18.9%
  • Introductory 0% on balance transfers for 39 months from date of issue
  • Introductory balance transfer fee of 3.49%
  • Introductory 0% on money transfers for first 20 months (with a 4% fee)
  • No introductory purchase term
  • Get an Amazon gift card of £20 if a transfer of at least £1,000 is made within 60 days (terms apply)
  • No annual fee
  • Customers must be at least 18 years old and can apply online or by phone


Top purchase credit card

Representative Purchase APR (Variable) Card Details
Sainsbury's Bank Purchase Credit Card MasterCard
Sainsbury's Bank Purchase Credit Card MasterCard
Go to Site
18.9%
  • Introductory 0% purchase term of 31 months
  • Introductory 0% on balance transfers for three months from date of issue
  • Balance transfer fee of 3.00%
  • Earn two Nectar points per £1 spent on Sainsbury's shopping and fuel, and one point for every £5 spent elsewhere
  • Bonus points offer: earn 1,000 bonus Nectar points each time £35 or more is spent on Sainsbury's shopping, up to 10 times in the first two months, up to a total of 10,000 points (offer available for new customers until 28.12.17)
  • No annual fee
  • Customers must be at least 18 years old and can apply online or by phone


Top 0% interest credit card

Representative Purchase APR (Variable) Card Details
Sainsbury's Bank Dual Offer Credit Card MasterCard
Sainsbury's Bank Dual Offer Credit Card MasterCard
Go to Site
18.9%
  • Introductory 0% on purchases and balance transfers for 30 months
  • Introductory balance transfer fee of 2.74%
  • Earn two Nectar points per £1 spent on Sainsbury's shopping and fuel, and one point for every £5 spent elsewhere
  • Bonus points offer: earn 1,000 bonus Nectar points each time £35 or more is spent on Sainsbury's shopping, up to 10 times in the first two months, up to a total of 10,000 points (offer available for new customers until 28.12.17)
  • No annual fee
  • Customers must be at least 18 years old and can apply online or by phone

Information and rates correct as at 10.11.2017

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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